You're reading: German executives, Swiss train manufacturer to help modernize Ukrzaliznytsia

A team of executives from German state-owned railway Deutsche Bahn may manage Ukraine’s passenger rail service in 2022. 

According to a deal signed on Aug. 24, Deutsche Bahn will provide consulting services to Ukraine’s state-owned railway operator Ukrzaliznytsia until the end of 2021 for over 1 million euros. 

A management team from Deutsche Bahn will then take control of Ukrzaliznytsia’s passenger service at the beginning of 2022, according to the agreement. 

While the Deutsche Bahn managers will have decision-making power over Ukrzaliznytsia’s passenger services, they will operate within the framework of the Ukrainian rail operator’s governance structure and there will be no change of ownership.

“We are confident that the transfer of control of passenger transit to Deutsche Bahn will enable us to get the fastest possible results,” said newly-appointed Ukrzaliznytsia CEO Oleksandr Kamyshin.

Saving Ukrzaliznytsia 

The company has $1.3 billion in unpaid loans, putting it on the verge of technical default.

The railway monopoly suffered significant financial losses during the COVID-19 pandemic, carrying fewer passengers and less cargo. The company’s net loss last year widened to $426 million compared to $107 million in 2019, according to its financial report published on April 9.

Ukrzaliznytsia’s routes and equipment are outdated. The company’s decrepit rolling stock is in dire need of replacement or repair, as 95% of its locomotives are over 25 years old. 

In order to modernize its equipment, Ukrzaliznytsia signed a memorandum on Aug. 26 with Swiss train manufacturer Stadler and the Swiss government to purchase 90 Swiss trains using a 500 million euro loan from Switzerland. 

This is the first-ever Swiss export financing project in Ukraine. It will cover 60 local commuter trains, 20 regional trains and 10 long-distance intercity trains.

The memorandum also envisages moving some of Stadler’s production to Ukraine through the construction of a new factory inside the country.