The Ministry of infrastructure plans to increase railroad transportation tariffs by 30% in 2016. This will lead to the further recession in Ukrainian economy.
According to the Mariupol Ilyich Iron and Steel Works CEO Yuri Zinchenko, if the tariffs increase, Metinvest expenses would rise by $80 million. As to Ilyich itself, its additional expenses would total $25 million.
“Our metal cost price will increase by $7 per ton. We will lose such markets as the Gulf, Near East, North Africa and Turkey, where we have to compete with Russia and China. Our output will fall by 25%”, he said.
The Avdiivka Coke and Chemical Plant CEO Musa Magomedov claims railroad tariffs increase will raise coke cost price by $2.5 per ton and decrease pig iron output.
“We can’t switch to other transports, as coal and coke are bound with railroad”, he added.
Metal makers say Ukrzaliznytsia transportation has been falling since 2011, but the officials try to put the entire burden on the manufacturers.
“If our tariffs are so low, then why does the transportation volumes fall? Perhaps, something is wrong with the officials’ logics? Perhaps, it is not they who subsidy the industry, but the industry pays the tariff? The drastic change of tariffs will make whole industries profitless, companies will be closed, there will be less cargo, and Ukrzaliznytsia will again champion tariffs increase. That’s a vicious circle, and it will be very difficult for us to come out of it. Ukraine’s economy will fall into a deep recession”, Magomedov believes. (Ukrainian metal)
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