State Audit Service Launches Probe into Ukrzaliznytsia
The State Audit Service of Ukraine has initiated an audit of Ukrzaliznytsia, the state railway monopoly, to examine the justification for its subsidy calculations. This audit, led by the head of the State Audit Service, Alla Basalayeva, will commence on March 23 and continue until July 1. The investigation focuses on the rationale behind Ukrzaliznytsia's request for a 16-billion-hryvnia subsidy, which was allocated by the Cabinet of Ministers. This comes at a critical time for Ukraine's infrastructure, which is vital for both the economy and civilian mobility during the ongoing war.
On March 2, the Cabinet of Ministers decided to allocate 16 billion hryvnias from the state budget's reserve fund to the Ministry for Communities and Territories Development. These funds are designated for financing in 2026. The Ministry will then disburse the money to Ukrzaliznytsia on a quarterly basis to cover its expenses.
Financial Strains on the Railway Operator
Serhiy Leshchenko, Deputy Head of Ukrzaliznytsia's supervisory board, highlighted that the company has lost 49% of its freight traffic volume between 2021 and 2025. Facing these severe losses, Ukrzaliznytsia can no longer afford to subsidize passenger services, which were previously offset by profits from freight operations.
'During the full-scale war, rail freight turnover has contracted significantly. Consequently, Ukrzaliznytsia requires government assistance. Our task is to determine the accuracy of the calculations the company has presented to the government.'
— Alla Basalayeva
Amidst upcoming changes to tariff policy, a two-stage increase in freight tariffs by 41.5% is proposed for 2026. The presidential 'Ukrzaliznytsia-3000' program, which supports long-distance travel, remains in effect but does not apply to premium-class services. Additionally, as of March 1, the price for a set of bed linen in platskart and coupe carriages has risen to 95 hryvnias, up from 80.
The State Audit Service's probe aims to clarify Ukrzaliznytsia's true financial condition and the validity of its claims for state support.
This planned audit represents a crucial step in ensuring financial transparency and the efficient use of public funds. Given the company's substantial losses in freight and the ongoing need to support passenger services, the audit's findings could significantly influence future funding and tariff policies for the railway. The situation may compel the government to reassess its approach to subsidizing and financing state-owned enterprises under crisis conditions.