Breaking up and sale of Ukrzaliznytsia to destroy Ukraine's logistics – minister

A proposal of presidential advisor on economic issues Oleh Ustenko to break up and sale JSC Ukrzaliznytsia is lame, said Infrastructure Minister Volodymyr Omelyan.

"Today's thesis of unheard for me advisor to president of Ukraine Oleh Ustenko was fairly shocking: 'Ukrzaliznytsia must be killed and dismembered'…Did you ask business and people? And what did they tell you? And how all of you will carry everybody instead?" Omelyan wrote in a posting on Facebook.

He said that nowadays a cost of the company is lower than possible and reminded that Ukrzaliznytsia has a status of a strategic company, and its privatization is prohibited by law.

"To kill and dismember means not just killing of the large company, but screwing up of logistics of the whole state, throwing thousands of people on the streets," he said.

Omelyan said he believes that a high-quality reform of Ukrzaliznytsia, providing of comfortable well-paid jobs will ensure about one million votes of railway workers and their families in support of a politician that can implement this reform.

"In real terms, Ukrzaliznytsia this is 70% of the freight traffic of the entire state, hundreds of millions of passengers annually, 3-5% of GDP, potentially the largest and the best state-owned company in Ukraine, which not just successfully operate on a domestic level, but also can become a large East European player," the minister said.

According to him, the only way to develop Ukrzaliznytsia today is an in-depth reform consisting of several stages. In particular, to take away political influence on the company's activities, to carry quick reforms meant to stabilize the company in six months and find systematic approach to all types of carriages, as well as to launch private freight and passenger traction in test mode, to launch the production of electric locomotives and passenger trains, investment in infrastructure.

Besides, within two years the railway operator needs to prepare for an IPO (Initial Public Offering) and reach freight and passenger market of the neighboring states, and obtain IPO in two-three years, sell a small part of shares, preferably not to a portfolio investor, but to a strategic one.

Previously, presidential advisor on economic issues and Bleyzer Foundation executive director Oleh Ustenko has said that large state monopolies such as JSC Ukrzaliznytsia and NJSC Naftogaz should be broken up and sold off.