Preview of the research “What should the state do with Ukrzaliznytsia?”

30 July 2019

PJSC “Ukrzaliznytsya” is a monopolist on the railway transport market, since it owns the railway infrastructure, rolling and tractive rail stock, as well as carries out passenger and freight traffic. Ukrzaliznytsya provides more than half of the passenger and a third of Ukraine’s freight traffic, therefore, it is a crucial part of the economy.
The state performs three roles with respect to Ukrzaliznytsia: the owner, regulator and policymaker. These roles may conflict, so a balance should be struck between them and they should be institutionally divided in order to maintain this balance in the future.
Not all areas of Ukrzaliznytsia’s activities have a natural monopoly. Therefore, in the structure of the company it is necessary to separate those segments that work more effectively in the form of a monopoly, from those where the state should allow competition.
To ensure the harmonious development of the railway industry, an independent regulator should be established.
The objective of the analytical note is to answer the following questions:
• In what areas of Ukrzaliznytsya’s activities is it feasible to allow competition, and in which it is better to keep a natural monopoly?
• What assets of Ukrzaliznytsia should be owned by the state, and which ones should be privatized?
• What should be the regulator of the rail market?
Conclusions on the feasibility of reforming the field of railway traffic were made based on the financial model of the sector.