Will Ukraine be able to pass a sectoral draft law in order not to disrupt the agreements with the World Bank and fulfill the commitments made by the Association Agreement with the EU?
This year, the railway industry of Ukraine can "celebrate" a sad anniversary - 10 years of efforts to adopt the updated law on railway transport. The state assumed this obligation after the Association Agreement with the EU was signed in 2014. Since that time, various members of the Verkhovna Rada and the Cabinet of Ministers have failed more than one attempt to adopt the act, the current legislators and government officials are not lagging behind and are also in no hurry to implement modern standards in the activities of the domestic railway.
Meanwhile, the issue became even more urgent after the adoption of the law on railway transport in March of this year was included in the Program Document of the World Bank for the proposed loan of 1.5 billion US dollars to Ukraine for the Operation on the Development of Growth Bases.
Did the work on the railway bill intensify after that?
The legislator has no goal - only a way
According to the Association Agreement with the EU, Ukraine undertook to implement a number of standards and policies in the national legislation for harmonization with those existing in the EU in the field of transport by 2022. In 2015-2019, for this purpose, four draft laws "On railway transport" were submitted to the VRU. None of them were accepted.
"Two bills were governmental and approached the matter quite formally... There were two more bills submitted by deputies. These bills were discussed more widely and were aimed not only at the formal implementation of EU directives, but also at creating real conditions for the development of the railway. One of of them, No. 7316, even reached the session hall. But railway transport was not lucky then - the bill was put to the vote on Thursday, October 18, at 17:57. Since the plenary sessions of the Verkhovna Rada officially end at 18:00, many deputies already was not there, and there were no votes in the hall", - Volodymyr Husak, General Director of the Federation of Transport Employers of Ukraine, recalled the sad path of the bills.
Next, the Verkhovna Rada of a new composition took up the matter. The draft law on railway transport No. 1196 was registered right on the day of the swearing-in of deputies of the ninth convocation. A week later, the monomajority fraction submitted its version of the rules of the game in this area - bill No. 1196-1. Both bills were under consideration in the specialized committee for almost five years and had every chance to be worked out in detail and prepared for consideration in the session hall. But in April 2024, at the request of the committee, they were removed from consideration.
By that time, the branch law on railway transport had already received the label "one of the priorities". Its adoption was defined as a task in accordance with Ukraine's international obligations, in particular, the memorandum with the IMF and the attraction of loan funds from the International Bank for Reconstruction and Development for the implementation of the DPL system project "Loan in support of the development policy "Basics of Growth" in the amount of 1.5 billion dollars
This decision was preceded by several meetings that took place in the committee with representatives of the World Bank and the European Commission regarding Ukraine's fulfillment of its obligations under the adoption of this law. Based on the results of these meetings, a road map was outlined and it was agreed that before the registration of the new draft act in the Verkhovna Rada, it would be discussed with all key stakeholders and businesses.
The working group, which was joined by representatives of the Ministry of Community Development, Territories and Infrastructure, "Ukrzaliznytsia" and people's deputies, worked out a new text of the draft law. Subsequently, a working meeting on the project was held with representatives of the business community, the European Business Association, Amethe Ukrainian Chamber of Commerce in Ukraine and the World Bank.
In August, the press service of the Verkhovna Rada reported that "a constructive and objective discussion was held regarding the provisions of the draft law, to which a number of comments and suggestions were made and the need for its revision was indicated."
Substitution of laws or legislative placebo
But after that, the text of the updated bill never appeared on the website of the parliament. TTS asked for comments on this matter from the head of the committee on transport and infrastructure Yuriy Kisel, the head of the subcommittee on railway transport Artem Kovalev, the head of the committee on Ukraine's integration into the European Union Ivanna Klympush-Tsintsadze. But the aforementioned lawmakers refrained from commenting.
Yulia Klymenko, the first deputy head of the committee on transport and infrastructure, shed some light on the situation with the draft law. "I think there is currently no chance of passing this law in the proposed version," she told TTS. "While the draft cannot even pass a subcommittee. In addition, it must first be registered either by the CMU or by deputies so that it can be officially considered."
We spoke with Yulia Klymenko in the afternoon on October 21. And already on the same day, the draft law "On the system and peculiarities of functioning of the railway transport market of Ukraine" (No. 12142), submitted by the Cabinet of Ministers, was registered in the VRU.
In the explanatory note to the draft law, the authors assert that the document "introduces a system of state railway transport management bodies that complies with the provisions of European Union acts in the field of railway transport. It defines the basic requirements, duties and rights of the infrastructure operator, the carrier, the basic requirements for railway rolling stock , regulates the activities of operators of railway rolling stock and owners of rolling stock".
The draft act also "establishes the principle of equal access to infrastructure services, which applies to all persons interested in receiving such services."
The text of the project mentions the National Commission, which carries out state regulation in the field of transport, its powers are listed, but it is not specified when exactly it will be created. Also, the draft law, for example, does not mention private traction operators. It is only noted that the carrier is a business entity regardless of the form of ownership. At the same time, state-controlled carriers are clearly mentioned. In the final and transitional provisions, it is noted that the law will be able to enter into force only 5 years after the end of martial law on the territory of Ukraine, and entities of the non-state sector of the economy will be able to work on the 1520 mm railway network after another two years.
Meanwhile, it was previously reported that the discussed bill on railway transport provided that private operators would be able to put their locomotives on public tracks only 10 years after the end of the war. So, doubts arose as to which draft law the CMU submitted to the VRU.
The European Business Association of TTS explained that these are two different projects. "The draft law, which was discussed with business and stakeholders, is called "On railway transport". And it is still unclear when it will be registered in the Verkhovna Rada," the EBA noted. Which, in fact, coincides with the opinion of the first deputy head of the transport committee.
And if the draft laws are really different, then it seems that someone is trying to stop the document from moving again, creating several alternative projects. Or they are trying to "sell" to the World Bank under the guise of a railway bill a document that does not meet the commitments made in terms of content.
What does not suit the business?
"We are grateful for the involvement of business in the work on this document", - they say in the comments of the Central Committee of the European Business Association, however, they emphasize that there are many "buts". Experts explain that there are systemic provisions that business would like to see in the new version of the bill. In particular, this is the reform of JSC "Ukrzaliznytsia", which will be conditioned by the organizational and financial separation of the activities of "Ukrzaliznytsia" as a carrier and infrastructure operator, the prohibition of cross-subsidization of the specified directions, the creation of a separate structure to resolve issues with non-core assets and disputed liabilities, etc.
Experts also believe that the new law should provide for non-discriminatory access to public railway infrastructure; state regulation of the tariff for access to the railway infrastructure by agreeing the size of the tariff by the National Commission, which carries out state regulation in the field of transport; implementation of a transparent and clear tariff calculation scheme.
In addition, the new law should contribute to the creation of a competitive market for passenger and cargo transportation, additional and auxiliary services of the railway infrastructure; creation of conditions for efficient functioning of inactive infrastructure.
A new approach to providing socially important transportation is also needed (moving away from the practice of financing passenger transportation at the expense of cargo transportation); ensuring the safety of cargo and rolling stock and other progressive provisions.
Daria Sichkar, manager of the EBA Logistics Committee, previously emphasized one of the key points that needs to be refined - the introduction of private traction. The draft law contains a provision that within 5 years from the date of entry into force of the law, transportation on infrastructure networks with a track width of 1520 mm shall be carried out only by economic entities of the state sector of the economy, and the law shall enter into force only 5 years after the termination or cancellation of martial law on territory of Ukraine, she said in August. "In other words, in the best case, only in 10 years will it be possible for private operators to enter the 1520 track. This is categorically not supported by business, so we hope to finalize this provision," she commented.
"The admission of private companies to railway transportation is the main commitment that the Cabinet of Ministers took upon itself in international agreements with the World Bank and the EU Ukraine facility," Yuliya Klymenko confirms this point.
At the same time, the parliamentarian adds: "Private traction should be implemented, but in a very balanced way, so as not to destroy the UZ on the one hand, and not to create a private traction monopoly instead of the state one, on the other."
And so far - no money, no European integration...
Be that as it may, the issue of private traction is one of the cornerstones in the context of the draft law. "Opening of the rail transport market for private investors, which will reduce the state monopoly" is one of the demands of industry changes proposed by the World Bank within the framework of the repeatedly mentioned lending. This is designated as "trigger 1" for the second stage of the development program and is a condition for receiving the second tranche of financing under the development program (DPO2), which emphasizes its priority for the economic policy of Ukraine.
Actually, it is also important in the context of the European integration vector of Ukraine. You can talk as much as you want about European transport integration, but without the adoption of general EU rules, the country is unlikely to be welcomed into this community.
So far, unfortunately, progress in the transport sector regarding the implementation of the Association Agreement with the EU has stalled. For 10 years in the transport sector, the requirements of the European Union were met by Ukraine by only 56%. At the same time, in 2023, the promotion was only 3%. Whether domestic legislators and government officials are satisfied with these paces is a rhetorical question.