Yevhen Kravtsov, the CEO of Ukraine’s state-owned rail enterprise Ukrzaliznytsia, has officially resigned from his post, he announced on Facebook on Jan. 29.
In his post, Kravtsov wrote that the supervisory board had been satisfied with his work and there were “no formal grounds” for his firing, meaning that Ukrzalysnytsia would have to pay him compensation that he described as “not small,” for breaking his contract.
Kravtsov could not be immediately reached for comment.
So far, no formal grounds of dismissal have been given by the state railroad’s supervisory board, but both the state railroad operator’s supervisory board and the Cabinet of Ministers accepted his resignation as required.
Kravtsov ran Ukrzaliznytsya for two and a half years after working as a lawyer at the Asters law firm.
He first handed in his letter of resignation in December 2019 amid bad press over mismanagement and corruption at Ukrzalisnytsia.
Back then, Sevki Acuner, chairman of the supervisory board of Ukrzalyznitsia, while writing that Kravtsov had “played a key role in rescuing Ukrzaliznytsia from the troubles it was in two years ago,” he also acknowledged that “the level of criticism leveled at Ukrzaliznytsia has been intense.”
In the same statement, Acuner assured that an “independent Supervisory Board will ensure management continuity at UZ for the CEO position in a transparent manner and on a competitive basis.”
Restructuring
On Jan. 23, the state-owned company announced it could be overseen by Germany’s Deutsche Bahn, which later clarified it would only offer consultancy services to modernize the national railway.
The announcement followed an ambitious plan unveiled by the government in September 2019, according to which Ukrzaliznytsya would be divided into three companies: an infrastructure operator, a freight carrier and a passenger carrier.
According to Prime Minister Oleksyi Honcharuk, the railway can remain in state ownership, but the rest has to be privatized.
Ukraine’s largest employer, the railroad plays a key role in the nation’s economy and manages over 23,000 kilometers of tracks, with an aging fleet of 25,000 cars.
In 2019, Ukrzaliznytsia transported almost one million passengers to the EU and sold 25 million of tickets, making it the world’s six largest rail passenger transporter.
Criticisms
Ukrzaliznytsia is regularly criticized for its obsolete and non-transparent organization that has allowed corruption to flourish. Its equipment and rail lines are outdated and its workforce of 280,000 employees is bloated and inefficient.
The dilapidated railway system is in dire need of modernization, experts say, and the government has often said that its modernization is a priority.
“The services provided by Ukrzaliznytsia do not satisfy either goods suppliers or passengers,” former Infrastructure Minister Volodymyr Omelyan told the Kyiv Post in 2018.
Aging rolling stock, including locomotives and railway cars, and too many employees are the least of Ukrzalysnitsia issues.
The vast majority of the rolling stock has expired its lifespan and should be phased out.
The state railway has sought to keep its monopoly on engines, while critics have long complained that the heaviest users of the state railways, including oligarchs, have not paid their fair share, causing major deterioration of railway tracks.
In December 2019, Andriy Ryazantsev, Ukrzaliznytsia’s financial director, told journalists that the state-owned company needs $37 billion over 30 years to solve the existing problems.
At the time, he estimated that over 90% of the rail company’s assets were obsolete, with cargo train depreciation reaching 98%.
