In March, Ukrainian Railways announced that its repair facilities achieved a cost savings of over UAH 400 million (EUR 10.2 million) for the 2023-2024 period. This significant reduction in operational costs underscores the company’s ongoing commitment to enhancing efficiency and optimising resource utilisation. Looking ahead, Ukrzaliznytsia has set an ambitious target of saving UAH 1 billion (EUR 25.45 million) by 2030, demonstrating its strategic focus on long-term financial sustainability and operational excellence. These savings are expected to play a key role in supporting the modernisation of Ukraine’s rail infrastructure and improving the overall performance of the national railway system.
These cost savings are due to cost optimisation, the introduction of modern technologies and the development of the production of new spare parts. Additionally, last year, the state-owned company successfully completed the repair of a complex series of TEP70 diesel locomotives in a significantly reduced timeframe.
In particular, the repair plants of Ukrainian Railways saved a record UAH 255 million (EUR 6.5 million) in 2024. Of these, UAH 82 million (EUR 2 million) – twice as much as last year – was saved thanks to cost optimisation and the introduction of new technologies. This is twice as much as last year. The company saved another UAH 173 million (EUR 4.5 million) by completing the production of over 100 new spare parts and components that previously had to be purchased from third-party contractors. This is 67% more than in 2023.
Ukrzaliznytsia intends that in 2025 and subsequent years to continue its cost saving target through the development and implementation of measures to reduce costs and develop new products. “In the future, by 2030, at least UAH 1 billion [EUR 25.45 million] is a realistic assessment of the effect of our initiatives. After all, each implemented solution provides not only instant savings, but also a long-term effect, gradually increasing the efficiency of the entire direction and strengthening the team,” Yevhen Shramko, member of the board of Ukrainian Railways, said.
In 2024, the company’s enterprises implemented 156 cost savings measures, including the introduction of energy-saving solutions, a review of repair approaches, a reduction in costs for materials and spare parts, as well as a transition to in-house production of components.
To develop these measures, a comprehensive energy audit of enterprises was conducted in 2023, which helped to identify key points of resource consumption and find ways to increase their energy efficiency. At the same time, a cost assessment was carried out at each enterprise of Ukrzaliznytsia using the Lean methodology, which made it possible to find additional opportunities for reducing costs without significant investments. This applies, in particular, to operational improvements that help increase work efficiency and reduce costs by optimising internal processes.
Thus, one of the most effective projects was implemented at the Dnipro Electric Locomotive Plant. There, steam boilers used for heating water were replaced with a modern local electric steam generator. This allowed reducing costs by UAH 10 million (EUR 254,400) per year with capital investments of UAH 5 million (EUR 127,200). This example is currently being implemented at four more enterprises, where water for washing machines was heated by centralised steam supply.
The second direction is optimisation of energy-intensive equipment operating schedules. One of the main achievements was recorded at Zaporizhzhia Electric Locomotive Repair Plant, where the operating schedule of energy-intensive equipment was revised, which helped reduce gas consumption by UAH 2.2 million (EUR 55,600) annually. In particular, thanks to more efficient loading of gas heating furnaces, it was possible to reduce their operating time from 5 to 4 days a week.
Another important example for cost savings is the optimisation of the concrete mix production technology at the Korosten Reinforced Concrete Sleeper Plant. Thanks to the changed composition of the mix and the use of chemical additives, the enterprise reduced costs by UAH 5.3 million (EUR 134,850) per year, and the quality of concrete improved.
Recently, the company has completed the modernisation on its own powers of the another suburban electric multiple unit of model ER9M 559, the second suburban EMU that has been restored since the beginning of 2025.
In addition to optimising costs, Ukrainian Railways’ repair enterprises are also increasing their own production. Thus, in 2024 they completed the production of over 100 new spare parts and components, which allowed them to save UAH 173 million (EUR 4.4 million). Among the new products are parts and components for locomotives, wagons and coaches, electric multiple units, in particular protective structures and storages, cardan gear elements of electric locomotives, cylinder liners, pistons, rings for diesel engines of diesel locomotives, and much more to ensure the smooth operation of rolling stock. Previously, these spare parts were purchased from third-party contractors, including abroad, which not only cost more, but also delayed repairs due to logistical difficulties. Switching to own production allows Ukrzaliznytsia to save money, guarantee the quality of repairs, and avoid problems with supply.
In addition, one of the important achievements was the completio of the repair of the main passenger diesel locomotive TEP70, the first being repaired in December 2024. This series of diesel locomotives is more complex both in terms of the repair structure and in terms of the purchase of spare parts and the timing of the repair. Furthermore, the repair work on the locomotive was completed in an exceptionally short period, taking only two months. This swift turnaround highlights the efficiency and expertise of the maintenance team, as well as the effectiveness of the streamlined repair processes implemented. By minimising downtime, Ukrzaliznytsia was able to ensure that the locomotive returned to service promptly, thereby minimising disruption to operations and maintaining the overall reliability of the fleet.
In 2025, Ukrainian Railways plans to complete the overhaul of DR -1A diesel locomotive series and DE1 electric locomotives, the production of their components, as well as manufacturing of rail pads, wheel centres from its own casting, new types of reinforced concrete sleepers, and othersImproving repair and production processes is key to the stable and reliable operation of Ukraine’s transport system, contributing to business development, strengthening the country’s economic security, and providing customers with high-quality and timely repairs.
Recent achievements for infrastructure and rolling stock
Meanwhile, Ukrzaliznytsia is implementing projects to repair its infrastructure, facilities and renew its rolling stock.
In January, Ukrzaliznytsia has launched a revamped train border control point on the Polish border to optimise customs processes, boost freight volumes, and enhance the overall efficiency of cross-border traffic with the European Union.
The border control point has been relocated to Mostyska II station near the Ukrainian – Polish border in the Lviv region which will more than double the capacity, from 6 freight trains inspected per day to up to 15 trains. “These are new opportunities for increasing the volume of freight transport and accelerating passenger trains. We continue to accelerate Ukraine’s movement towards the EU. To do this, we are developing and improving our border infrastructure,” Oleksandr Pertsovsky, Chairman of the Board of Ukrzaliznytsia, said.
Prior to the implementation of the project, border inspection of trains heading from Ukraine to Poland was carried out on the Mostyska – state border section, and the average time for conducting control operations for one train was almost two hours.
During the reconstruction of the crossing point, four towers were built for inspection of rolling stock by employees of the Border Guard Service of Ukraine, two modular blocks of one- and two-story were installed for border control employees, as well as four enclosures for service dogs. The project also included the installation of a video surveillance system with 30 cameras, and Wi-Fi, while the catenary sectioning system was modernised.
This new facility is designed to handle a higher volume of cargo by reducing delays, cutting waiting times, and ensuring smoother logistical operations between the two countries. By optimising the border crossing process, Ukrainian Railways aims to support growing trade and enhance the flow of goods, contributing to economic stability.
The project to relocate the train border control point was implemented thanks to parity co-financing from the Connecting Europe Facility and the European Investment Bank.
“The work of the railway is impressive, especially in wartime, and we are proud to support its development through the Connecting Europe Facility programme in partnership with the European Investment Bank. Modernisation of the Mostyska II crossing point is another step forward in improving railway connections, strengthening Ukraine’s ties with the EU, and increasing passenger and freight traffic,” Katarina Maternova, EU Ambassador to Ukraine, said.
Ukrzaliznytsia continues to develop its railway infrastructure within the framework of the Connecting Europe Facility. Work is currently underway to modernise intermodal terminals and upgrade railway infrastructure on key routes connecting Ukraine with EU countries. Separate projects are aimed at improving logistics and optimising border crossing points.
In addition, with the support from European banks, the rail company is modernising its rolling stock.
Ukrainian Railways signed loan agreements with the European Bank for Reconstruction and Development (EBRD) for the purchase of electric locomotives and and construction of gas-fired power generation. In total, Ukrzaliznytsia will receive a record EUR 480 million support under state guarantees under the signed agreements.
Using the EBRD funding, Ukrzaliznytsia will begin the implementation of two large and critically needed programmes at once. The fist one involves the renewal of the locomotive fleet which is already practically beyond its service life, which negatively impacts Ukraine’s export capacity and defense capability. The second project covers the construction of gas power generation which is currently lacking due to the war. “It will partially cover the needs of the railway itself and other critical infrastructure facilities. The implementation of these initiatives will contribute to the sustainable development of Ukraine, increasing its economic potential and integration into the European market. Thank you for your support and I hope for fruitful cooperation within the framework of these important projects,” Oleksiy Kuleba, Deputy Prime Minister for the Reconstruction of Ukraine, said.
Under the rolling stock project, Ukrainian Railways will acquire electric locomotives through an up to EUR 300 million loan from the EBRD provided in December 2024. The loan repayment period is designed for 18 years. This project will be co-financed by a parallel USD 190 million grant from the Ukraine Relief, Recovery, Reconstruction, and Reform Trust Fund (URTF), managed by the World Bank within the framework of the RELINC project (Repairing Essential Logistics Infrastructure and Network Connectivity).
In May 2024, Ukrzaliznytsia announced a tender for the delivery of 80 electric freight locomotives with bids being analysed.
The EBRD will allocate EUR 180 million for the construction and installation of small-scale generators at sites around the country, aiming to mitigate the widespread electricity shortages. About EUR 65 million grant funds from donors will be accumulated for the implementation of the project. A grant of around EUR 12 million from the UK Government through the Energy Community has already been confirmed. In general, Ukrzaliznytsia plans to purchase and up to 270 MW of decentralised small-scale gas-fired power generation capacity at selected existing UZ sites across Ukraine. The EBRD loan will be co-financed by a parallel investment grant of EUR 12 million from the United Kingdom and an investment grant of up to EUR 56 million from a multilateral or bilateral international donor. The project, which will cost a total of EUR 248 million, will make the national energy system more resilient.
In addition, in April 2024, the US Export-Import Bank announced a USD 156 million loan supporting Ukrzaliznytsia’s diesel locomotive procurement project under which Wabtec will deliver 40 units.
According to the World Bank, USD 486 billion is the estimated cost of Ukraine’s recovery and reconstruction over the next decade. The biggest needs are in housing (17%), followed by transport (15%), commerce and industry (14%), agriculture (12%) and energy (10%).
RELINC will help Ukraine to reduce the impact that disrupted transport networks have on population and economy. The programme consists of two components of which one refers to rail connections including infrastructure, flatbed wagon production to increase containerised transport capacity, materials and equipment for rail infrastructure repairs including modular bridges for damaged rail bridge repairs and rolling stock renewal.
USD 598.6 million is the total cost of the entire RELINC project of which the World Bank and non-bank sources committed USD 280 million financing.
Share on:
