Ukrzaliznytsia sets liberalized rates for railcar rent

Ukrzaliznytsia sets liberalized rates for railcar rent



18 січня 2018 года
Конкорд Капитал

Ukrainian Railway (Ukrzaliznytsia, RAILUA) approved on Jan. 17 a new pricing methodology for freight railcar use, according to the company’s press release issued the same day. Earlier, prices for railcar use were regulated and far below those offered by private railcar providers, the company said, stressing that the resulting arbitrage generated shadow incomes for intermediaries and corrupt officials of up to UAH 5 bln p.a. More adequate pricing of railcar rent will liquidate the artificial deficit of railcars, Ukrzaliznytsia’s CEO said.



At the first stage, the company will set railcar rates on the asset base principle (accounting for costs of railcar purchases and servicing and allowing for a 10% margin for UZ). Later on, the company will use the market mechanism to price railcars, in which rates will be defined by electronic auctions. The company also announced preliminary prices for railcars that will be valid as of Feb. 19: prices for gondola cars will be UAH 542/day, and grain hoppers will be UAH 655/day, or about 2.5-3.5 times higher than the regulated rates.



Alexander Paraschiy: Earlier, the company estimated the economic effect from the liberalization of railcar rent of at least UAH 1.0 bln, while more precise estimates were UAH 1.5-4.0 bln p.a. We believe the new rates of railcar rent will allow Ukrzaliznytsia to generate additional revenue close to UAH 3.5 bln in 2018. That will also allow the company to invest in the purchase and modernization of new freight railcars, thus improving the company’s positions on the freight railcar market. While we can expect some opposition to new pricing from the company's key clients, it looks like the liberalization has low chances of being reversed. We retain our neutral view on RAILUA bonds.

Источник: Конкорд Капитал

Аналитик: Александр Паращий
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