CREATING COMPETITION ON THE UKRAINIAN RAILWAYS: AN ECONOMIST’S VIEW

Abstract

The article is devoted to the problem of creating competition on the Ukrainian railways. It is substantiated that the Ukrainian railways are not unique in possessing a state-owned state, vertically integrated monopoly railway. Based on research, it has been proven that competition is one of the ways to improve the efficiency and effectiveness of operations vis-à-vis the days of a state-owned monopoly. As rail passenger operations is not profitable, the main focus is on freight rail operations. Two broad strategies available to created competition in the railways sector were researched. Under the European model, the infrastructure remains a state-owned monopoly, while independent train operating companies compete to provide service to shippers, paying regulated access fees to the infrastructure operator. Under the Americas model, only the company owning the infrastructure generally runs trains on that infrastructure. It is concluded that each of the two models has its advantages and disadvantages. The Americas model has more advantages. The clear advantage of this model has to do with the financing of the infrastructure. There are debatable issues about the best model for Ukrainian railways at the level of government and reformers. To date, Ukraine has chosen the European model. This choice is an experiment. It is important to give an answer to the question which of varieties of this model should reformers ultimately be aiming toward? The choice is not an easy one.

The conclusion is made that the government and the courts will need to provide strong support to the new rail regulator and the Antimonopoly Committee of Ukraine, which will be required to enforce non-discriminatory access terms.