Scrutiny of Ukrzaliznytsia's Spending
Ukraine's State Audit Service found no major violations in the passenger transport expenditures of the national railway operator, Ukrzaliznytsia, and confirmed that the company's request for UAH 16 billion in budget support is justified. A key focus of the review was the issue of compensating the railway for transporting passengers entitled to fare discounts, which emerged as a critical point of the investigation.
The primary objective of the audit was to verify the accuracy of costs incurred in passenger services. Alla Basalaeva, a representative of the State Audit Service, stated:
“Ukrzaliznytsia asked for UAH 16 billion from the state budget. The audit service found no major violations. The railway operators substantiated their expense side. There is a minor discrepancy—reimbursement for discounted passenger transport.” - Alla Basalaeva
Before the full-scale war, losses from passenger operations were offset by profits from freight transport. However, in 2025, freight revenues dropped by 17%, creating an additional challenge for Ukrzaliznytsia. Despite this, passenger traffic in 2025 reached 106% of the level recorded in 2021.
Since 2008, the company has been shortchanged by UAH 4.9 billion in compensation for carrying discounted passengers, with over UAH 600 million of that amount owed in 2025 alone. The State Audit Service's inspection ran from March 23 to July 1, 2026, during which the company's financial expenses were thoroughly analyzed.
Findings and Next Steps
In conclusion, the audit results confirm that Ukrzaliznytsia's request for state budget support is well-founded. Nevertheless, the unresolved issue of compensation for discounted passenger transport remains pressing and demands further action.
The audit findings show that Ukrzaliznytsia can count on support from the national budget, but the compensation problem for fare-discounted travel highlights the need to improve financial mechanisms in this area. With freight revenues declining, finding effective solutions is essential to ensure the stability of passenger services and their funding.
As the financial pressures on Ukrzaliznytsia continue to mount, the railway operator faces significant challenges not only from passenger transport demands but also from proposed increases in freight tariffs. These proposed hikes have raised concerns among business groups, highlighting the delicate balance the government must strike in supporting the railway while managing the economic implications for various sectors.