Ukraine’s ministers remain preoccupied over control of Ukrzaliznytsya, Ukraine’s state railways company, and the extent of corruption in the rail transport company that employs 270,000 people.
The Cabinet of Ministers decided to transfer Ukrzaliznytsya directly under its control on Jan. 18 without any official explanation. The move was followed by a public disagreement between the company’s management and Ukraine’s Infrastructure Ministry on Jan. 25 at a Cabinet of the Ministers meeting.
Its transfer to cabinet control has only been voted on. No official document confirming the decision has been published.
The conflict stems from Polish CEO Wojciech Balczun and Ukraine’s Infrastructure Minister Volodymyr Omelyan differing perceptions on the state of reforms involving the railway. While Balczun reports notable progress since he took over the company, Omelyan doesn’t see the positive results he expected.
Serhiy Vovk, the head of the Center for Transport Strategies, a news and analytical center, said the decision to transfer the company to the cabinet happened after Omelyan declared his intention to provide rigid inspection to the railway company in 2017.
Omelyan heavily criticized Balczun’s performance during a cabinet meeting on Jan. 25 at which Balczun reported Ukrzaliznytsya’s results over the last year.
Omelyan criticized Ukrzaliznytsya management for losing court cases worth Hr 2 billion ($71 million). The cases included one against PUMB Bank, disputed debt to Turkish infrastructure company Dogus and a series of cases with Alfa Bank.
Ukraine’s Prime Minister Volodymyr Groysman defended Balczun during the meeting and claimed Omelyan lacks competence in the field. Groysman noted Balczun’s experience in reforming Polish PKP Cargo.
Balczun wrote on his Facebook page that he won’t respond to Omelyan’s claims, calling them untruthful and distorted.
“In the conditions we work in… I believe we managed to achieve a lot,” Balczun said at the Cabinet meeting. “I came here to work as I used to. I don’t feel comfortable speaking with the minister, who serves neither reforms nor Ukraine.”
In an interview with Hromadske TV, however, Omelyan said he hasn’t seen reform of the state monopoly. “I clearly saw that this person was unable not just to conduct, but provide the conditions for the reforms,” Omelyan told Hromadske on Jan. 26.
Vovk said that Ukrzaliznytsya’s results are not good. “There is no clear strategic plan regarding the development of the company,” Vovk said.
The reform plan was developed in 2016 during the tenure of the ex-Infrastructure Minister Andriy Pyvovarsky.
The plan dictated that Ukrzaliznytsya should be transformed from a state asset into state-owned corporation with an independently chosen supervisory board and top managers, according to Omelyan. This is often the first step towards partial or full privatization.
The process to turn Ukrzaliznytsya into corporation started in 2015 when Ukrzaliznytsya was registered as a joint stock company, but has since stopped, Omelyan said. Once transformed, the company would be transferred under the control of the Ministry of Economic Development, which will take care of all state monopolies.
“Regardless our attitude towards Balczun or Omelyan, the decision to transfer control over the company is questionable in terms of efficiency,” Vovk said.
If the railway company will be officially controlled by the Ministry of Economic Development, it will have “four centers of control” – two ministries, the Cabinet of Ministers and Ukrzaliznytsya, according to Vovk.
Corruption schemes at Ukrzaliznytsya alleged by its former management and Omelyan, namely lowering tariffs on cargo transportation, fuel purchase at higher prices, employee’s negligence and others, haven’t prevented Ukrzaliznytsya from declaring a profit of Hr 303 million ($10.8 million) in 2016.
Omelyan, however, claims that its declared income is overestimated due to different accounting standards used. He said the ministry has sent evidence of abuse and corruption at Ukrzaliznytsya to the Anti-Corruption Bureau, the National Police and the Security Service of Ukraine.
