The task of state monopolists is to work for the economy, not to receive excess profits: an expert on increasing tariffs of “Ukrzaliznytsia”

Photo by UNIANThe government is obliged to manage state-owned companies that hold a monopoly position in the market, and to ensure that these companies work for the economy, and do not receive excess profits. Andrii Novak expressed this belief to the Committee of Economists of Ukraine, commenting on the intention of Ukrzaliznytsia to increase the tariff for Ukrzaliznytsia freight transportation by 37%.

“The government is obliged to manage these processes, because state monopolists are under the control of the government. And not with the aim of obtaining maximum profits from these monopolies. This is not the task of natural monopolists, even more so of state ones! The task of state monopolists is to create the most efficient conditions for the work of the economy system. Where there are natural monopolists, such as energy companies or logistics companies, the main task of the government is to ensure the minimum possible tariffs,” he emphasized Novak

He emphasized that this should be the approach of the Cabinet of Ministers if it is necessary to stimulate the development of the economy, create new jobs and strengthen national security.

“Obtaining maximum profits by Ukrzaliznytsia or regional gas companies is not the task of the authorities for managing natural state monopolies. Keeping the minimum tariffs for goods and services of state monopolies will allow business to work much more efficiently. Then, throughout the economic system, all business entities will be able, firstly, in the conditions it is better to survive the war, and secondly, to provide more jobs and tax payments and strengthen economic defense,” the expert summarized.

We will remind, earlier it became known that Ukrzaliznytsia received UAH 1.7 billion in net profit for the 3 quarters of 2024. This, according to market experts, allows the company to keep the cargo tariff at the current level. But UZ significantly increased operating costs, and because of this, initiated a 37% increase in freight rates.

Business associations, including international chambers of commerce, criticized this decision and warned of significant risks for the economy that it carries. Thus, the ArcelorMittal Kryvyi Rih plant warned that it may close the plant, which employs 20,000 people. And the Danube Shipping Company announced the danger of stopping the fleet in the event of a tariff increase.