Harmonization of railway tariffs in Belarus resulted in domestic freight market reformatting

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April 22, 2016 18:31

On 30th May, Belneftekhim Concern announced the launch of Euro 4 diesel fuel trial pumping through Navapolack-Ventspils pipeline.

Following the railway tariffs harmonization, the costs for local transportation of goods by rail have increased sharply in Belarus. Businesses started considering alternative routes and transportation means in order to minimize their transportation costs. Enterprises which were unable to shift to other transportation means might start working at a loss or go completely bankrupt.

Within the Common Economic Space agreement Belarus has undertook an obligation to unify tariffs for transportation of goods on domestic routes using various transport means. Since January 1st, 2013, all rail way cargo tariffs were unified regardless of the cargo’s destination (Economy Ministry decision No 111 of December 17th, 2012). As a result, domestic freight tariffs increased by 2.76 times since early 2013, and for some goods and destinations by more than 7 times, taking into account previous discounts.

As a result of railway tariffs rise, cargo transportation shifted from railway to road and pipeline transport. In April and May 2013 CJSC Belarusian Oil Company tested Navapolack-Ventspils pipeline for Euro 4 diesel. When problems linked with this pipeline are solved, its transportation capacity will be increased. Transportation of cement by road has increased as a result of higher railway tariffs and in generally the attractiveness of transportation by road has increased, while by railway decreased.

Higher railway tariffs had a significant impact on some businesses, first of all, on cement plants. Cement’s shelf life is short. Raw materials for the cement production are delivered by rail, which increases its costs significantly and, combined with cement sales problems in the domestic market, results in many cement plants working at a loss. Enterprises working on wooden pallets and chips also suffered from the higher tariffs. Wooden pallets and chips transportation costs now equal their price due to the sevenfold increase in tariffs.

Thus, after the railway tariffs’ harmonization, the country’s cargo transportation structure has changed. Businesses used railway transport due to its low costs and now they have to reconsider transport means or abandon production of the goods, which depended on low railway cargo tariffs.

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President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

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