Industrial producers urge Ukrainian govt not to raise freight, electricity tariffs, warning of production decline, possible shutdowns
Associations representing Ukraine's mining and metallurgical industries, other industrial and extractive enterprises, as well as producers of construction materials and cement, have spoken out against raising freight and electricity tariffs, warning that such moves could lead to production cuts or even shutdowns.
They voiced their position during a press conference at the Interfax-Ukraine news agency on Tuesday titled "Tariff policy of state monopolies – JSC Ukrzaliznytsia and NPC Ukrenergo, and their negative impact on Ukraine's industry and economy."
President of the Ukrmetalurgprom Association of Enterprises Oleksandr Kalenkov emphasized that the main consumers of so-called "natural monopoly" services are companies from the mining and metals sector, cement and construction materials producers, and others.
"These are the key clients of companies like Ukrzaliznytsia and Ukrenergo. Before the war, the mining and metals sector together with ferroalloy plants consumed about 60% of all electricity used by industry and accounted for over 40% of Ukrzaliznytsia's freight traffic. So, we depend on these monopolies just as much as they depend on us," Kalenkov said. He expressed hope that in the future these markets could become more competitive and monopolies dismantled, but until then, the state must ensure that such monopolies do not abuse their position, he said.
Kalenkov also pointed out that Ukraine currently has the highest electricity tariffs in Europe. "In practice, this means we're losing the competitive battle to every EU producer. I'm not even talking about those located in countries that still use Russian energy resources. Their electricity and gas prices are several times lower than ours. As a result, we're losing our traditional export markets," he said.
Regarding railway tariffs, he noted that freight rates in Poland and Slovenia are already cheaper than in Ukraine. "Right now, shipping cargo via Ukrzaliznytsia costs 15–20% more than in Europe, and there are plans to raise tariffs by another 37%. This isn't just economically unreasonable. It's a dead end," Kalenkov said.
In his view, the tariff policies of Ukrzaliznytsia and Ukrenergo require attention at the Cabinet of Ministers and Verkhovna Rada levels. Ideally, an independent transport tariff regulator similar to the National Energy and Utilities Regulatory Commission (NEURC) should be established.
To subsidize passenger transportation, the state budget should allocate UAH 26 billion for 2026, so that freight tariffs do not need to be raised. "Otherwise, our enterprises will have to scale back production or exit the market altogether," Kalenkov warned.
Executive Director of the Ukrainian Cement Producers Association (Ukrcement) Liudmyla Kripka stressed that two-thirds of cement produced in Ukraine, as well as the raw materials used to make it, are transported by rail. Therefore, the sector is highly sensitive to any unjustified increases in freight tariffs.
"We've been through this before. Such actions already had negative consequences in the past, and this time will be no different. Producers will be forced to pass higher logistics costs onto their final products, which means higher prices for consumers. This will reduce consumption, and therefore production and shipments as well," Kripka said.
She also highlighted the need for government support mechanisms for energy-intensive, export-oriented industries as a temporary anti-crisis measure. According to her, technical and economic criteria should be introduced specifically for enterprises in priority sectors. The savings achieved by lowering transmission and dispatch tariffs could be redirected into investments in renewable energy sources.
"That way, we would also advance the decarbonization goals set before us by the European Union," Kripka said.
Citing data from the state-owned enterprise Ukrainian Industry Expertise, she said that a 30% increase in freight tariffs would lead to a nearly UAH 100 billion decline in GDP, a loss of UAH 98 billion in foreign currency earnings, annual budget losses exceeding UAH 36 billion, and the elimination of at least 76,000 jobs.
Executive Director of the Ukrainian Ferroalloy Producers Association (UkrFA) Serhiy Kudriavtsev said most ferroalloy enterprises are located along the Kakhovka Reservoir, a region close to the combat zone, where operating conditions are extremely difficult. In particular, manganese processing plants have been idle for two years.
"We can't transport raw materials to ferroalloy plants because railway lines have been destroyed. Nor can we afford to pay for detours to deliver the ores needed for production. Today, ferroalloy plants are operating at only 15–20% of capacity. If this continues, ferroalloy production in Ukraine will cease altogether, we'll have to import alloys, and the remaining plants will lose their jobs," Kudriavtsev warned.
He added that this frontline region is currently being sustained mainly by the Nikopol Ferroalloy Plant, as well as Nikopol's pipe and metallurgical enterprises but the area could turn into a "gray zone" if people are forced to leave.
"We're facing problems with production, logistics, labor shortages, and electricity. This is a region that used to generate electricity, but now we receive it from western Ukraine at tariffs that are unaffordable for us. We may have to shut down entirely, and that would be irreversible. Plants are now operating at 15% just to maintain continuous processes, because if a ferroalloy furnace is shut down, it takes at least six months to restart it," the UkrFA director said.