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Business and Ukrzaliznytsia discussed financing of passenger transportation

18/ 05/ 2026
  On 13 May, the Logistics Committee of the European Business Association held a meeting with representatives of Ukrzaliznytsia. The discussion focused on the financing of passenger transportation and further steps towards reducing cross-subsidisation between the freight and passenger segments. Oleh Yakovenko, Director of the Strategy and Transformation Department at Ukrzaliznytsia, presented the results of a two-year pilot project aimed at reforming the financing mechanism for passenger transportation. As a reminder, the state previously allocated UAH 16 billion from the reserve fund to cover passenger transportation costs. Participants discussed the mechanism for distributing the allocated funds, the expected losses of passenger transportation in 2026, as well as plans for financing the passenger segment in 2027. Project details In 2026, the public service obligation will apply only to domestic long-distance and regional transportation and will not cover suburban or international services. At the same time, the suburban segment generates approximately UAH 11 billion in losses annually, which are currently covered by freight transportation revenues. Representatives of Ukrzaliznytsia reported that despite security-related challenges, the company managed to achieve the following results in the first quarter of 2026: approximately 95% of the planned transportation volume; 97% of the planned transportation revenue. Key challenges Representatives of the railway operator also outlined a number of challenges accompanying the implementation of the project: Reserve fund is not a budget line item This creates risks for the regularity of payments and complicates financial planning. Uncertainty regarding 2027 Currently, there is no instruction requiring the Ministry of Finance to annually allocate state budget expenditures for the implementation of the pilot project. Verification by the State Audit Service and allocated costs Until the methodology for accounting allocated costs is approved, the actual cost of the public service obligation is calculated without taking into account revenues and indirect costs. Suburban transportation remains outside the mechanism The current state financing mechanism does not cover suburban transportation. According to Ukrzaliznytsia, the strategic objective is to introduce a fully-fledged Public Service Obligation (PSO) model based on European practice from 2028 onwards, ensuring a transparent and predictable financing mechanism for socially important passenger transportation.

On 13 May, the Logistics Committee of the European Business Association held a meeting with representatives of Ukrzaliznytsia. The discussion focused on the financing of passenger transportation and further steps towards reducing cross-subsidisation between the freight and passenger segments.

Oleh Yakovenko, Director of the Strategy and Transformation Department at Ukrzaliznytsia, presented the results of a two-year pilot project aimed at reforming the financing mechanism for passenger transportation. As a reminder, the state previously allocated UAH 16 billion from the reserve fund to cover passenger transportation costs.

Participants discussed the mechanism for distributing the allocated funds, the expected losses of passenger transportation in 2026, as well as plans for financing the passenger segment in 2027.

Project details

In 2026, the public service obligation will apply only to domestic long-distance and regional transportation and will not cover suburban or international services.

At the same time, the suburban segment generates approximately UAH 11 billion in losses annually, which are currently covered by freight transportation revenues.

Representatives of Ukrzaliznytsia reported that despite security-related challenges, the company managed to achieve the following results in the first quarter of 2026:

  • approximately 95% of the planned transportation volume;
  • 97% of the planned transportation revenue.

Key challenges

Representatives of the railway operator also outlined a number of challenges accompanying the implementation of the project:

  • Reserve fund is not a budget line item

    This creates risks for the regularity of payments and complicates financial planning.
  • Uncertainty regarding 2027

    Currently, there is no instruction requiring the Ministry of Finance to annually allocate state budget expenditures for the implementation of the pilot project.
  • Verification by the State Audit Service and allocated costs

    Until the methodology for accounting allocated costs is approved, the actual cost of the public service obligation is calculated without taking into account revenues and indirect costs.
  • Suburban transportation remains outside the mechanism

    The current state financing mechanism does not cover suburban transportation.

According to Ukrzaliznytsia, the strategic objective is to introduce a fully-fledged Public Service Obligation (PSO) model based on European practice from 2028 onwards, ensuring a transparent and predictable financing mechanism for socially important passenger transportation.

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