State-owned railway operator Ukrzaliznytsia lost $53 million (Hr 1.4 billion) between January and June 2021, according to a financial report published on Sept. 13 by online publication Marlin.
As of the end of June, the company’s total debt stood at $1.46 billion.
Cargo transportation brought in revenue of over $1 billion while passenger revenues were nearly $91 million. Despite comparative increases from the same period last year, the results failed to meet Ukrzaliznytsia’s own targets by 11% for cargo and 6% for passenger revenues.
Ukrzaliznytsia has been under heavy scrutiny since July, when the National Security and Defense Council asked the Cabinet of Ministers to take control of the organization due to its dire financial situation.
While the Cabinet did not take control of the railway, it did replace CEO Ivan Yuryk with Oleksandr Kamyshin, a former manager at two subsidiaries of Rinat Akhmetov’s System Capital Management.
On Sept. 8, the Cabinet of Ministers approved the creation of a crisis management council chaired by Infrastructure Minister Oleksandr Kubrakov to scrutinize the troubled rail operator’s performance.
On Sept. 9, the parliamentary committee investigating Ukrzaliznytsia published a scathing report which accused the company’s supervisory board of failing to address major issues like cargo tariffs and low worker salaries.
“For their ineffectual work and its consequences the head (of the enterprise) and other members of management … received high salaries paid by the shareholder, significant rewards, bonuses and financial assistance,” the report said.
The text slammed the high salaries paid to members of management and the supervisory board, which totaled nearly $2.5 million over the last two years.
As a comparison, the average annual salary of an Ukrzaliznytisa worker is around $5,200 per year.
The report stated that Ukrzaliznytsia has lost a third of its assets due to “miserly” maintenance and replacement.
Ukrzaliznytsia has come to be seen as an unreliable transporter due to the dilapidated state of its rolling stock: coal doesn’t get delivered to power stations on time as there aren’t enough cars and only 25% of the company’s grain cars are in an operational state.
The company’s neglected tracks are also outdated and in dire need of modernization. Of the nearly 19,800 kilometers of railway tracks, only 9,300 are electrified.
