Challenges of liberalization for natural monopolies: Ukrainian railways
Authors: Nykyforuk Olena 
Published: October 2018

The article examines the approaches to transport policy at the state level, the particularities of the liberal approach and the specifics of the current liberalization processes in the rail transportation markets in Ukraine. Purpose of the study. To consider the main challenges facing the Ukrainian railways in the context of liberalization of the freight transportation markets, passenger transportation, locomotive traction and liberalization of access to infrastructure. Objectives of the study. The main tasks are: 1) to analyze the main approaches to regulation of the transport sector at the state level; 2) determine the role of the state in the implementation of liberalization policies; 3) to generalize the development of the liberalization processes at the present stage in the railway transport sector in Ukraine. Methods of research. The article uses structural-logical, economic-statistical and economic-mathematical methods, as well as comparative analysis, a graphical method. Results of the study. The analysis of the main approaches to regulation of the transport sector at the state level has been carried out. The necessity of combining the principles of paternalistic and liberal approaches in the combined transport policy is determined. A historical review of the process of reforming railways in Ukraine in the context of the theory of the stages of the life cycle of natural monopolies is carried out. The experience of development of the process of liberalization in the market of freight traffic is generalized. The necessary investments in the transport sector and railway transport in particular have been assessed. Scope of application of the results. Scientific results can be used and have been used by the Ministry of Infrastructure, implementing the state policy in the field of transport. Conclusions. Among the two polar approaches to transport policy, namely full non-interference or liberalization of the transport sector and a paternalistic approach, presupposes strict regulation of tariffs and a uniform form of ownership, the combined approach looks like an alternative in modern conditions, in which the principles of liberal (for commercial activities and tariffs) and paternalistic approaches. The choice of its application is confirmed, first of all, by the world practice of public administration in the transport sector. At the same time, the development of a competitive environment in the field of rail freight traffic in Ukraine will depend on the following factors: the introduction of EU railway directives, which are spelled out in the Association Agreement between the EU and Ukraine of 2014; the subsequent separation of regulated and unregulated activities (the monopoly sector from potentially competitive) in the organizational and economic sense. After all, while the actual definition of the sphere of freight transportation as a competitive sector, Ukrzaliznytsya, as the owner of the infrastructure, enjoys unlimited powers with respect to other business entities in this market. It is necessary: reorganization of potentially competing segments; the establishment of civil liability of all market participants, as well as the conditions for their interaction; bringing the investment process in line with market requirements; improving the mechanism for setting tariffs for transportation and the adoption of the rules for non-discriminatory access to infrastructure.