The state will compensate for losses: what the new model means for passengers and the railway
19 February 17:25
The Cabinet of Ministers of Ukraine has approved the launch of a pilot program for state-funded long-distance domestic passenger transportation. This involves a transition to the PSO (Public Service Obligation) model, which is widely used in EU countries. This was reported by the press service of Ukrzaliznytsia, as relayed by "Komersant Ukrainian".
In fact, the state will systematically compensate the carrier for the difference between the actual cost of transportation and socially accessible tariffs.
Why is this necessary?
According to the government, the actual cost of a trip is on average more than three times higher than the ticket price. At the same time, fares remain low, especially in the context of martial law, when the railway is used by the military, their families, internally displaced persons, and millions of citizens.
Passenger transportation has traditionally been unprofitable for Ukrzaliznytsia, and the deficit has been covered by more profitable areas, such as freight transportation. The new model should gradually reduce such cross-subsidization.
16 billion for 2026
For 2026, the volume of the state order has been set at UAH 16 billion. These funds should ensure the stable operation of the main long-distance routes.
Funding will be provided quarterly in the form of advances. Separate compensation is provided for transportation services performed in January–February 2026.
Control over expenses
The State Audit Service of Ukraine (SASU) will be involved in checking expenses from the outset. The government emphasizes that the mechanism provides for control over the execution of the order and the effective use of funds.
Thus, the state will not only finance transportation, but will also formally act as the customer of the service.
A step towards the European model
Deputy Prime Minister for Recovery – Minister of Community and Territorial Development Oleksiy Kuleba said that the new system brings Ukraine closer to European practices for ordering socially important transport services.
The PSO model provides for transparent contracts between the state and the carrier, clearly defined routes, quality standards, and compensation amounts.
The challenge of wartime
The railway infrastructure continues to operate under shelling and regular destruction. In such conditions, predictable funding becomes not only an economic but also a strategic issue — to support the mobility of the population and the unity of the country.
The experimental nature of the mechanism means that the government will test the model before possible full-scale implementation. At the same time, the amount of UAH 16 billion shows that the state is taking systematic responsibility for the accessibility of passenger transport.
