The Cabinet of Ministers of Ukraine has decided to launch an experimental mechanism of state ordering for domestic long-distance passenger transportation. The project was developed by the Ministry of Community and Territorial Development in cooperation with the Ministry of Finance.
This is a gradual transition to the European PSO (Public Service Obligation) model, when the state systematically compensates the carrier for the difference between the real cost of transportation and the current socially affordable tariffs.
“Railways in Ukraine are a critically important means of transport for millions of Ukrainians. And the state’s task is to ensure that train traffic is stable and predictable, and travel remains affordable for people. For this reason, we have developed a mechanism that brings the Ukrainian system closer to the European model of ordering socially important transport services,” said Oleksiy Kuleba, Deputy Prime Minister for the Reconstruction of Ukraine – Minister of Community and Territorial Development of Ukraine.
Today, the actual cost of a trip is on average more than three times higher than the ticket price. At the same time, the tariffs remain as affordable as possible – this is especially important in conditions of martial law, when the railway is used by military personnel, their families, internally displaced persons and millions of citizens throughout the country.
The railway operates under constant shelling and daily destruction, therefore it requires stable and predictable financing.
For 2026, the volume of the state order for passenger transportation has been set at UAH 16 billion. These funds will cover the main long-distance routes so that the country remains connected. The state will not only order services, but also monitor their implementation.
The State Audit Service of Ukraine (SASU) will be involved in checking the correctness of expenses from the very beginning – so that every budget hryvnia is used effectively. The funds will be transferred quarterly by advance payment. Transportation performed in January-February will also be financed.
The new model introduces transparent and predictable rules for financing passenger transportation, reduces the financial burden on JSC Ukrzaliznytsia and will gradually allow for the abandonment of cross-subsidization between types of railway transport activities.
The experimental mechanism is a step towards the full integration of the Ukrainian passenger transportation financing system into the European PSO model, which is widely used in EU countries. (Development Ministry)