Massive damage to infrastructure due to warfare in eastern Ukraine is already hitting the local economy hard, and will continue to do so for years to come due to costly and lengthy repairs required.
As some of the mammoths
of industry get cut off their supply and shipping chains, Ukraine
might lose up to 4-5 percent of its gross domestic product in the
second half of 2014, according to Concord Capital investment bank
data.
One of the most
damaged elements of vital economic infrastructure that it taking many
hits is the railway. More
than 166 objects of railway infrastructure of the Donetsk,
Prydniprovsk and Southern railways have been damaged as a result of
military operations in May-July 2014, according to an Ukrzaliznytsya
spokesman.
There
also seems to be a pattern behind what might seem like random hits.
The damage is taken by the most important supply arteries of the
region, which is home to industrial giants responsible for a big
chunk of export-oriented commodities in Ukraine.
A
lot of damage at occurred along the main routes of Donetsk railway
(Chaplyne – Yasenuvata, Krasnoarmiysk –Gorlivka, Kostantynivka –
Debaltseve). These railroads are used to ship coke and coal from
Dnipropetrovsk to metallurgical plants.
Mykola
Topchiev, Head of Analytical Department of Ukrzaliznytsya, the
national rail carrier, says that such key enterprises as Azovsteel,
Yenakiyevo steel plant, Alchevsk steel integrated plant, Donetsk
steel plant, Donetsk metal works, Avdiivka coking plant, Stirol,
Severodonetsk union Azov are all under threat of, or have had their
supplies disrupted.
Donetsk
and Lugansk-based bluechips account for 23 percent of industrial
output of the country. But by now, because of the war, circulation of
their commodities fell 2.5 times, according to Oleksandr
Parashiy, head of the analytical department of Concorde Capital.
Passenger
traffic has been disrupted as well because of numerous explosions.
In fact, trains are not going to any other directions but via
Lozovaya – Kramatorsk – Konstantinovka. It has been the only
functioning railway route to Donetsk for about a month.
An
Ukrzaliznytsya spokesman said due to lost traffic alone in the past
seven month its losses have accounted for Hr 1.6 billion. Terrorist
actions have caused Hr 300 million of damage. But the whole industry
could lose up 10 times that much by the end of the year.
“Taking
into account the fact that Donetsk and Lugansk oblasts form 16
percent of national GDP, overall, Ukraine might lose 4-5 percent of
GDP in
the second half-year of 2014” says Parashiy.
