Progress in the association of rail transport with the EU is still insufficient

According to the Association Agreement with the EU, full measures to reform railway transport should be completed in October 2022. As of the end of 2021, no measure has been taken.

BRDO experts Andrii Bukovskyi and Zoya Melnyk shared their findings from the market research “The provision of wagons for use within Ukraine”.

  1. A key factor in the generation of risks of violation of legislation on protection of economic competition is a combination of activities carried out in both monopoly and competitive market segments in one legal entity (business entity). This factor is multiplied by the fact that the JSC “UZ” is a natural monopoly (in terms of providing the railway transport infrastructure in use) and a supervisory (control, inspection) entity that monitors the compliance with requirements of regulatory acts to guarantee traffic safety in railway transport, their classification, accounting, and analysis.


The monopoly position of the JSC “UZ”

natural monopoly

monopoly (dominant)

monopoly position evidence 

a) provision of infrastructure



b) transportation of goods by rail


✓ 100%

c) provision of services of main cargo locomotives


✓ 100%

d) provision of wagons for use within Ukraine


✓ more than 35%


The strategic way to limit monopoly and develop the competition, and create a level playing field for the development of economic activities of transport companies is a sustained implementation of Ukraine’s obligations in terms of railway transport under the Association Agreement. They imply introducing a new market model similar to European railway systems.

It should be noted that since 2006 the list of objectives of state regulation for the railway transport development has remained virtually unchanged and transferred from one concept or program to another, from one action plan or strategy to the next. It suggests little progress or no progress in the railway reform over the last 14 years, so it has led to the current situation called critical, in particular, in the EU report.

  1. A keystone of structural reforms of Ukraine’s railway transport, like most of the developed countries’ railways under reform, is a transition from an inefficient territorial and sectoral management (in the case of Ukraine, when each of the six railways was engaged in all activities) to a market organizational structure that is vertically integrated by main activities.
  2. At present, all necessary measures to restructure the JSC “UZ” following EU legislation on the separation of infrastructure management and transport operations and prepare the company to launch a competitive railway market has been set out in the Government’s plans*** approved by decrees of the President of Ukraine and the National Transport Strategy of Ukraine.

It should be taken into account that these plans contain a complex set of interrelated and sequentially determined measures. The current unfulfilled tasks make it impossible to complete the following measure in a timely manner.

According to the Association Agreement with the EU, full measures to reform railway transport should be completed in October 2022. As of the end of 2021, no measure has been taken.

  1. The action plan for the implementation of the Association Agreement, in particular, provides for the creation of a holding structure of the JSC “UZ” on a functional basis (including the formation of wagon companies).
  2. The Government’s plans for railway transport reform take into account the requirements of European legislation and the recommendations of international consultants and experts, in particular, in 2018 the UN published the report “Railway Reform in the ECE region” that reviewed the progress of reform in many countries, including and in Ukraine. (BRDO experts Andrii Bukovskyi and Zoya Melnyk prepared a brief overviewof this document)

In 2020-2021, BRDO’s Transport and Infrastructure Sector experts conducted a large-scale analysis “Rail cargo transportation”. By using a differentiated approach to determining institutional, economic, and organizational problems of the sector, they described the state of competition in the railway market in Ukraine, as well as formed specific proposals for solving its most urgent problems. The results of the analysis and expert opinions can be found in the Green Paper.

Has anything changed in the dynamics of the sector development over the last year? You can learn more about this aspect in a new Green Paper “UNBUNDLING of the JSC “Ukrzaliznytsia”: liberalization of the freight wagon market”, regarding which the Better Regulation Delivery Office is launching public consultations to develop effective solutions in the sector (more on REGULATION.GOV.UA # PRODialogue)


Action plan for the implementation of the Association Agreement (п);
Action plan for the implementation of the National Transport Strategy of Ukraine-2030 (;
Action plan to reform railway transport(р)

Source: URM