The Central Railways Council summarized the discussion on the tariff policy for freight transportation in 2025-2026 - key positions and scenarios.
"Ukrzaliznytsia" enters 2026 with a forecast of over 28 billion UAH in losses, mostly due to passenger transportation. In 2025, the deficit will be partially covered by one-time subsidies from the reserve fund, in total - in the amount of 12.4 billion UAH.
Budgetary support for loss-making passenger transportation remains the basic option for 2026. The alternative option of a 37% increase in freight tariffs simply does not work: the outflow of the freight base in the event of an increase in transportation costs will be 10-15%, which will bring only UAH 12-16 billion in additional revenues and a significant negative macro effect for the economy (reduction in production, exports, tax revenues) and an increase in load and, accordingly, the destruction of highways.
To discuss options and scenarios for tariff policy, the Central Railway Transport Service organized a special expert discussion "Railway Transportation Tariffs in 2025-2026: Where is the Balance Between Customer Capabilities and Carrier Needs" with the participation of shippers, representatives of Ukrzaliznytsia, industry and economic experts.
We share the thoughts that were expressed during the discussion.
Oleksandr Kava, Deputy Minister of Finance:
The Ministry of Finance is currently actively working on preparing the draft state budget for 2026. The distribution of funds is still being finalized, and I would not like to talk about what is not finished. I can say about what has been done this year. In addition to the funds that were provided, more than 4 billion hryvnias were allocated from the reserve fund to support Ukrzaliznytsia for the purchase of new passenger cars. Previously, there was a lot of skepticism and it was believed that this was impossible in Ukraine, although this is a normal European experience, both the purchase of rolling stock and investments in infrastructure from the state budget.
But still, while the war is ongoing in the country, the key factor for financing from the state budget is the security and defense sector. All other programs are on a residual basis, unfortunately, but the importance of the development of railway transport for the economy of Ukraine is undeniable.
Mauro Longobardo, CEO of PJSC "ArcelorMittal Kryvyi Rih":
Indexing freight tariffs by 37% will deprive us of competitiveness and may finish off the mining industry. Our two main pressures are logistics and electricity; since the beginning of the war, we have been operating in the red for the fourth year and cannot pass on additional costs to the price of steel - the market will not accept this. We are already losing some customers, sometimes having to adjust prices downwards. Every year we transport about 8 million tons through UZ, so the increase directly affects the results. We should not become the "only customer" who will pay for the overall situation: the increase should be distributed fairly. The ArcelorMittal group has poured almost $1 billion into the Ukrainian company for survival - these funds are not to cover other people's losses. For us, 37% is hundreds of millions of dollars and is not a red, but a "black flag": we cannot pass on these costs to the price and become uncompetitive. Other solutions are needed - transparency and predictability of tariffs, operational efficiency of UZ and the involvement of international partners to modernize the network.
Ruslan Ilyichov, General Director of the Federation of Employers of Ukraine:
If we leave the current model, where Ukrzaliznytsia earns on freight transportation, and directs all funds to finance unprofitable passenger transportation, the company will find itself in a vicious circle. If we leave this model further - when Ukrzaliznytsia earns on freight transportation, and all funds go to passenger transportation - and leave UZ one on one with this model, then there is no way out. Without the opportunity to invest, Ukrzaliznytsia will underfinance capital investments, efficiency will fall.
What do we offer? A memorandum for 3+ years between the government and Ukrzaliznytsia with a guarantee of systemic state financial support in various forms. This will allow us to balance income and expenses, restructure credit obligations, plan priority investments more confidently, and relieve constant tension around the risks of tariff increases, which, frankly, will kill our competitiveness.
Yulia Sirko, People's Deputy of Ukraine, First Deputy Chairman of the Parliamentary Committee on Transport and Infrastructure:
We are stuck in a cycle of unpredictable budget "injections" into "Ukrzaliznytsia". There is only one way out - a package of laws: a new law on railway transport, a law on PSO (public transport), a law on the tariff regulator and a law on the investigation of transport incidents. Without this, we are constantly returning to zero.
Another fundamental point is the Ukraine Facility. We will not receive funds for the railway until we adopt new laws. It is impossible to simply come and say: "give us money for locomotives", - the first question will be: "where are your obligatory laws?".
Patching holes for 4 or 8 billion does not solve the problem. "Ukrzaliznytsia" needs process optimization, a capital investment plan for 3-5 years and a transparent calculation of unprofitability.
The conclusion is simple: if we wanto, for enterprises to work, and not close, we need three years of predictability and new legislation. Business should push its deputies in the districts. And support for "Ukrzaliznytsia" from the budget should be predictable, stable and transparent - within the new legal framework, and not one-time decisions.
Musa Magomedov, People's Deputy, Member of the Verkhovna Rada Committee on Economic Development:
The vast majority of deputies support separate budget financing for "Ukrzaliznytsia". Everyone understands the conditions under which it operates: passenger transportation was unprofitable even before the war, and after the suspension of aviation, part of the passenger traffic fell on the railway. It is impossible to compensate for these losses with freight alone.
Short-term planning will not stabilize the situation - three-year planning is needed. Based on the data of the Committee on Economic Development, it is necessary to protect the budget parameters and adopt the necessary laws.
Valeriy Tkachov, Deputy Director of the Commercial Department of JSC "Ukrzaliznytsia":
"Ukrzaliznytsia" is critically important for the economy and defense capability; we account for almost 65% of freight transportation, plus a significant social burden. The cargo base has shrunk due to the war: before the war, 312-315 million tons, now - 162-165 million tons. We are working on attracting new cargo (retail, SMEs, timber, manufactured goods), developing cross-border transportation. In parallel, optimization: alienation of non-core infrastructure and assets, reduction of the central apparatus, additional income from the sale of scrap and crushed stone, direct purchases of electricity. Tariffs are state-regulated and, by law, must be indexed annually if costs increase. There has been no indexation for three years, while electricity +216%, diesel +57%, market wages +65%. Against the background of a cargo base that is half as small, our budget does not allow for full indexation, so we have applied for partial budget support: already 4.35 billion UAH, about 9 billion more are being discussed. This does not cover all costs, but it allows us to maintain the transportation process and find a compromise. Oleg Khomenko, General Director of the Ukrainian Association of Freight Forwarders: If we talk about annual indexation, then the agricultural producer also has a "corridor" of prices: we are tied to the world market, Ukraine is not a market maker, so it is impossible to shift logistics costs to the buyer. Raising the tariff is actually getting into the producer's pocket. The cargo base of the agricultural sector is shrinking: due to the war, the area has significantly decreased, approximately 10 million hectares. At the same time, excise taxes on fuel, export duties - everything is hitting the agricultural sector. 37% is too big a burden. Ukrzaliznytsia needs systemic solutions and efficiency improvements, not to patch up the deficit with scrap or layoffs; grain should not subsidize other cargoes. War and attacks on infrastructure are a reality, but everyone is in the same conditions.
The burden will fall primarily on small producers without their own fleet: traders will shift the costs to them. And most importantly, you cannot change tariffs in the middle of the season: announce changes for the next season in advance.
Vadym Kotenko, head of the Kernel railway logistics service:
Indexing by 37% will add $5/t to the cost of transportation for agricultural products - this will hit the entire sector. At distances of 400–500 km, cars are already competing with the railway; after the increase, some of the cargo will go to the roads, and this share will only grow.
According to Ukrzaliznytsia, agricultural cargoes are currently profitable. Therefore, it is logical to raise tariffs for unprofitable transportation, and not to make a "flat" indexation. Otherwise, we will have a washout of freight traffic and a constant cycle of new increases.
Andriy Telyupa, Deputy Minister of Economy:
We are really looking for a model that will simultaneously support both Ukrzaliznytsia and business. Today, 37% is being discussed as the base indexation figure, but for industry and the agricultural sector, this is unsustainable - this is clearly heard from the market.
According to world practice, the state compensates for passenger transportation costs - this is normal. But in war conditions, we have budget restrictions, and the Ministry of Finance cannot cover everything. Therefore, a compromise model is needed. I agree: 37% is a significant increase. At the same time, without any decision, Ukrzaliznytsia will lose its ability to maintain and develop the network, and there will be no talk of capital expenditures.
We are conducting active consultations with the market and Ukrzaliznytsia to work out a solution that will allow the market to work, will not kill industry, and at the same time will allow Ukrzaliznytsia to survive. This decision will then be put up for discussion and presented to the Prime Minister so that the government can make a balanced, considered decision based on real figures. Our task now is to find a working mechanism.
Oleksandr Tkachuk, Director of Terminal Network Development at Levada Cargo (Lemtrans Group):
The railway has constant operating and capital costs, which can only be covered by an increase in the cargo base. Tariffs should vary according to the principle of elastic/inelastic demand. A container is elastic: cargo is easily transported by car. Speed and price are critical for us. Ukrzalzinytsia can compete with road transport, delivering quickly and at market rates - this is how we will increase the base.
If the client has an alternative and the price increases, the base shrinksI - and it hits the system and the economy. We need transparent calculations (costs, expected effect of the increase, purpose of using funds) and predictability. When "Ukrzaliznytsia" and the state provide this, the tension around tariffs will significantly decrease.
Oleksandr Bilyansky, Deputy General Director for Supply of PJSC "ArcelorMittal Kryvyi Rih":
What does indexation +37% mean for us? This is $26.5 million (1.1 billion UAH) of additional losses per year. We transport about 8 million tons of products and raw materials; in our annual logistics costs, this is $129 million. Translating inefficiency into a tariff per client is not a customer-oriented and definitely not a European approach.
We need predictability in the actions of the public sector, primarily in tariff policy. Any tariff should be based on a transparent cost base; without this, it is incorrect to talk about "economic feasibility".
We already had significant increases in 2021–2022, now - another 37%, and then, what - 50%? A change in the model is needed: transparent financial reporting and understandable costs as a basis; real operational efficiency, a move towards competition in traction and market mechanisms.
Oleksandr Kalenkov, President of OP "Ukrmetalurgprom":
We are interdependent with "Ukrzaliznytsia", but "indexation" is the wrong path. Please forget the word indexation and move to economically justified, cost-effective tariffs. Otherwise, we will index inefficiency. Let me remind you: there was already a sharp increase in July 2022. The new mark-ups turn the tariff into a quasi-tax - a bad signal for investors as well.
Tariffs should be calculated at the real cost of routes/segments, not "averaged". The difference between large industrial shipments and small ones, "elevator-elevator", is not 20-30%, but 2-3 times. Hence - hidden cross-subsidization, when ore subsidizes other cargoes. According to the practice of our enterprises, it is already cheaper to transport in Poland/Slovakia than in Ukraine.
The state should close the passenger deficit at the expense of the budget/partners (targeted PSO compensations), and not cargo clients. Otherwise, we will get a calculated effect: according to the assessment of "Ukrpromzovneshexpertiza", the tariff increase will give -15% of the cargo base (or 27 million tons). In monetary equivalent, this is -96 billion UAH of GDP and -36 billion UAH of taxes.
The position is simple: first efficiency and PSO, then - talk about a realistically justified tariff, and not about another indexation.
Oleg Niv'evsky, associate professor at the Kyiv School of Economics:
It is wrong to tie tariffs to macro indicators. They don't do that. It is critical for a monopolist to know and transparently show its own costs and form a tariff based on them. Along with average costs, it is worth applying pricing at marginal costs to expand the freight base. That is, more market, fewer "formulas".
Regarding the passenger: a shortage of tickets at a low price is lost revenue. Dynamic pricing for passenger transportation is needed to reduce cross-subsidization from freight.
Reform is inevitable: unbundling of UZ (infrastructure separately, transportation separately) according to the European model will improve finances in the medium term. The government, as the main shareholder, should promote this politically.
And finally: the railway is only one element of the chain. Let's look at the entire logistics system (including ports) and reduce the total cost of delivery - this will increase the competitiveness of the economy after the war.
Volodymyr Husak, General Director of the Ukrainian Railways Union:
In wartime, the main task of the state and Ukrzaliznytsia is to let business survive. After a sharp increase in 2022 (plus 70%), we saw stops and closures of enterprises.
Today, the state can and should help: there is significant international financial support that does not go to defense and can be directed to Ukrzaliznytsia. An effective mechanism is working: funds go to the state budget, then to the reserve fund, and from there to the needs of the railway. This is a win-win scenario.
And the conversation about new indexations should be held only after reforms: separate passenger transportation and finance it directly from the budget; separate infrastructure and traction, opening up competition where possible. In the near future, there is only one priority - covering the passenger's losses at the expense of the state. There are both sources and opportunities for this.
The general logic that emerged in the conversation is simple: "automatic" indexations should be removed from pause forever. Instead, a three-year and predictable framework is needed - with a memorandum between the government and Ukrzaliznytsia, direct budgetary compensation for public services (PSO) for passenger transportation, including preferential ones, and a gradual revision of freight tariffs using a transparent methodology. These are tariffs based on real cost and elasticity of demand.
In parallel, the participants see the need to complete the legislative package (new law on railway transport, PSO, tariff regulator, investigation of events), move towards unbundling infrastructure, traction and passengers, introduce dynamic pricing in passenger transportation and strengthen the operational efficiency of the company itself. Sources of financing are the state budget and reserve fund, as well as Ukraine Facility funds for specific reforms and modernization. Key condition- announce any changes in tariffs in advance and outside peak seasons in order not to break contracts, maintain the cargo base and exports, and at the same time ensure the viability of "Ukrzaliznytsia".