The National Security and Defense Council (NSDC) plans to introduce temporary state administration at state-owned railroad monopoly Ukrzaliznytsia to save it from bankruptcy, Ukrainska Pravda reported on July 30.
A document obtained by the Ukrainian outlet showed that the NSDC already asked the Cabinet of Ministers to act accordingly.
“Today, in terms of national security, there are quite dangerous processes in (Ukrzaliznytsia) financial and economic activities,” the document stated on July 30.
Ukrzaliznytsia suffers from colossal unpaid loans worth a total of $1.3 billion, putting the company on the verge of technical default.
The railway monopoly has suffered significant financial losses during the 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.
According to the same document, the disastrous financial conditions of Ukrzaliznytsia may lead to “destabilization of the work of the critical infrastructure of the railway industry.”
The NSDC voiced concerns over wage debts, ineffective public procurement and the slow pace of railway electrification.
“It creates a real threat to the vital interests of Ukraine,” according to the document obtained by Ukrainska Pravda.
Ukrzaliznytsia’s routes and equipment are outdated and in dire need of modernization.
Currently, of the nearly 19,800 kilometers of railway tracks, only 9,300 are electrified. As a result, the state has to buy diesel fuel from Belarus, coming from crude oil produced in Russia.
Despite the multimillion losses during the quarantine, the Ukrainian government refused to help the company financially.
For years, Ukraine’s largest state-owned enterprise has hovered on the verge of bankruptcy, mired in corruption scandals and grossly overstaffed, with nearly 250,000 total employees.
On March 17, the Cabinet of Ministers fired Volodymyr Zhmak, the head of Ukrzaliznytsia, for allegedly lobbying oligarch Rinat Akhmetov’s interests and making decisions that violated the company’s statute.
