Automatic indexation of tariffs of “Ukrzaliznytsia” would undermine the entire pricing system in the grain market – the President of UGA

Автоматическая индексация тарифов «Укрзализныци» подорвет всю систему ценообразования на зерновом рынке - президент УЗА

Automatic indexation of tariffs of “Railways”/railway transportation in the producer price index of industrial production would undermine the entire pricing system in the grain market, said 112.ipresident of the Ukrainian grain Association Mykola Gorbachov.

This is stated in the article “the”Ukrzaliznytsya” balloons price: Business warns of slowing economy”.

Note, on the website of the Ministry of infrastructure on February 1 a draft resolution of the Cabinet, which introduced a mechanism for automatic annual indexation of tariffs for cargo railway transportation at the level of producer prices of industrial products. This means that the state monopolist “Ukrzaliznytsia” will be able to arbitrarily change the tariff rates upward, reviewing them on a quarterly basis. Before each next increase claimed the Cabinet.

Traders strongly against automatic indexation of tariffs for PPI, as this would undermine the entire pricing system in the grain market. According to Gorbachev, at least one third of all grain is purchased on forward contracts, that is, before the harvest will be grown and harvested. “It is very important to plan and understand how much it will cost logistics in September, October, November. Without knowing the exact size of tariffs, it is impossible to predict and price for forward contracts. Thus, traders will lay the risks in logistics at purchase prices, this will lead to reduced profitability in the production of grain,” – said Gorbachev.

In a press release on the website of the ULTRASONIC States that the adoption of the draft resolution on automatic indexation of prices will enable it to improve the quality of services provided. Despite the fact that in recent times ULTRASONIC has implemented many initiatives that have significantly increased the cost of logistics, the quality of service from this still has not grown, says Gorbachev.


“The BONDS hold a monopoly, while the quality of its services, to put it mildly, leaves much to be desired. ULTRASOUND cannot guarantee the time at which the goods will be delivered. While the norm is 250 km per day we have the record of when a distance of a few hundred kilometers the cargo is delivered for two weeks,” said the President of the Ukrainian grain Association.

The situation may save the admission of private operators to locomotive traction, which they now have. “Fair fare will be formed only in the presence of competition, and this requires a public-private partnership and liberalisation of the locomotive component. Only the market can adjust the size of the tariff to a normal level of profitability that ensures profitability. In the US, three private railway operator, and if you buy their services forward, you can get a significant discount,” said Gorbachev.