Error message

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

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.

Similar articles

Minsk attempts to make up for image losses from military exercises by opening to Western values
October 02, 2017 11:49
Image: Catholic.by

The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.

Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.

Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.

In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.