Debt restructuring will allow Ukrzaliznytsia to restore economy, define required capital investment – acting CEO
The successful restructuring of the debts of State Railways Administration of Ukraine Ukrzaliznytsia will allow the company to bring its economy back to normality, and in particular determine the required amount of permanent capital investment that has been frozen in recent years, acting CEO Maksym Blank has said at a briefing in Kyiv.
"Most of the debt was formed during 2010-2013. In 2014 funds were borrowed only for refinancing. The last three years before the "change of course" was the period when the debt was accumulating faster," he explained.
According to an Ukrzaliznytsia press release, the scenarios for managing the Ukrzaliznytsia budget foresee a further fall in freight and passenger traffic in 2015.
"While the operating expenses of Ukrzaliznytsia also declined, primarily due to cost savings for purchase, repair and modernization, the reduction in total revenues was more significant. It is planned that the size of capital investment will be kept at low levels during the year of 2015, but some capital spending will have to be carried out in the future to ensure rail traffic safety, as the operational life of many fixed assets will expire soon," reads the report.
Blank added that the basis for this move is the extremely difficult situation in the country, Donetsk Railways' being beyond the control of transportation processes which are performed centrally, and the significant drop in commodity turnover.
