German railroad operator Deutsche Bahn and Ukrzaliznytsia are preparing for a partnership agreement. Ukraine's Ministry of Infrastructure has already signed a memorandum of partnership with the largest German railroad company. The signing was accompanied by statements from Prime Minister Oleksiy Honcharuk, Infrastructure Minister Vladyslav Krykliy, and comments from the operator itself. Some of them have changed over time. Viktor Medvid, director of the William Invest Expert consulting company, commented on them on Ukrainian Radio.
As part of the Memorandum of Understanding, Ukrazaliznytsia will be managed by Deutsche Bahn for 10 years, Prime Minister Oleksiy Honcharuk said on January 22. "Yes, we want to give the railroad to the Germans for 10 years. We associate this important decision not only with the fate of the infrastructure, but also with a systemic decision that should show that Ukraine is unprecedentedly open to investment, to the world, to new standards."
And then something went wrong. Infrastructure Minister Vladyslav Krykliy said that the ministry intends to engage Deutsche Bahn's management to cooperate and develop Ukrzaliznytsia as advisors with the possibility of changing their status in the future. The fact that the company will be in the status of advisors was directly confirmed by Deutsche Bahn at the request of DW.
Today, the Prime Minister decided to make amends. "An important point to avoid speculation is that we are only talking about a strategic partnership, not the sale or concession of Ukrzaliznytsia. The Ukrainian railroad remains under full state control, and that's for sure. Period!" he wrote on Facebook.
We analyze what is already known.
Viktor Medvid, director of William Invest Expert consulting company, transportation expert:
TECHNOLOGY. "There is a technology to test certain statements on the public. And based on the public's reaction, the relevant opinion is adjusted. And the best way to adjust the position is through a memorandum. Because this is a declaration that does not contain any obligations, but only intentions. And these intentions can change three times in a day. This was demonstrated by the Prime Minister."
LEGISLATIVE REGULATION OF THE ISSUE "There are relevant laws adopted by the Verkhovna Rada, and there are approved strategic directions for the development of the railroad for the next decade. And the Prime Minister is not the person who can individually decide on the disposal of Ukrzaliznytsia, a decision is needed, first of all, from the Verkhovna Rada, and then a resolution of the Cabinet of Ministers."
MANAGEMENT DOES NOT EQUAL INVESTMENT "The Prime Minister did not say the right thing not only in the interval, but also during his first speech. When he says that he wants to attract investment, and then talks about governance. Governance does not imply investment."
WHY THE GERMANS? "If you look on Google, 38% of the rolling stock of this railroad (Deutsche Bahn - ed.) meet the quality standards, and more than 60% have received consumer complaints about poor-quality transportation. Memorandums, when they are adopted, should have specific indicators, the purpose for which it is done. So that it can be measured later. In this case, the statements were purely political."
THE MEMORANDUM ITSELF IS NOT A THREAT. "It has no backroom agreements. Because he assumes that today a memorandum was signed with a German company, tomorrow with a Japanese company, then with the United States."
PROJECTS. "I believe that the best forecasts for the implementation of this plan are not (referring to the statement by Infrastructure Minister Vladyslav Krykliy that the ministry intends to engage Deutsche Bahn management to cooperate and develop Ukrzaliznytsia as advisors with the possibility of changing their status in the future - ed.). First, the assets, including the intellectual assets of Ukrzaliznytsia, should not be valued at zero. This is the property of the Ukrainian state. Another company will have access to all the processes, including intellectual assets. We know from MotorSich that other countries pay huge sums of money for intellectual property. Here, we are providing it for free, and top managers will have access to classified information, including because it is a strategic enterprise. I believe that foreigners should be hired as specialists, experts, advisors, and narrow specialists."
Listen to the full version of the interview here
On February 5, the "Strategic Partnership Agreement" with Deutsche Bahn is expected to be signed in Kyiv. At that time, Prime Minister Oleksiy Honcharuk promises to provide more information to the public.
The day before, the director of Ukrzaliznytsia, Yevhen Kravtsov, in BBC interview Ukraine said that last year the company achieved record profitability: "Preliminarily, last year we made a profit of UAH 2.5-3 billion. But if we talk about the passenger segment, the need to finance, for example, suburban traffic alone to upgrade the suburban train fleet is tens of billions of hryvnias. Passenger transportation used to bring $200-500 million in losses per year to the company."
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