Ukraine's Cabinet approved a railway reform roadmap on September 23 that requires Ukrzaliznytsia to separate infrastructure management from train operations organizationally and in its accounts by the end of 2027, with a new corporate model to follow by 2029. The standard-gauge 1,435 mm network is due to open to competition in 2031, while the main 1,520 mm network will open only after EU-agreed transition periods and not before martial law ends.

The September decision replaces the 2019 railway reform action plan, which the Cabinet formally declared invalid. It also fulfils a commitment under the Ukraine Plan that underpins financing through the EU's Ukraine Facility, tying rail liberalisation to Kyiv's wider accession programme ahead of negotiations on Chapter 14 covering Transport Policy.

Deputy Infrastructure Minister Volodymyr Shemaiev, who joined the ministry in September after heading Ukrzaliznytsia's International Projects Office, wrote that the reform now had "a timeline, not just a direction". He stressed, however, that "throughout the reform, the railway must keep running reliably under wartime conditions".

What does the roadmap change first?

The 2027 deadline does not necessarily mean a full breakup. The roadmap requires organizational and accounting separation inside UZ; a target corporate model must be approved by end-2027 and implemented two years later.

CEO Oleksandr Pertsovskyi said in July that UZ had "practically completed" the separation of its main business verticals and was in the final stages of creating infrastructure operator UZ Infra, which would consolidate infrastructure activities now spread across the six regional railways. Passenger, suburban and locomotive operations already run on separate internal balances.

Pertsovskyi has also argued that unbundling does not require the businesses to leave one corporate group, citing Deutsche Bahn as an example, and that wartime conditions demand strong operational coordination when capacity may be needed for evacuations and other critical movements.

Which institutions follow?

The action plan sets out further milestones before any market opening:

• A framework Law on the Rail Services Market by the end of 2028
• An independent National Transport Regulatory Commission in 2029
• Infrastructure charging and capacity-allocation procedures ahead of market opening

The roadmap itself acknowledges the tension in the exercise, stating that the vertically integrated model "ensures the continuity of the sector's operations" but "creates constraints" on competition, non-discriminatory infrastructure access and transparent tariff-setting. It therefore envisages a "controlled transition to a competitive model".

How will passenger funding change?

A separate major change targets the long-standing cross-subsidy under which freight revenues cover passenger losses. Socially important passenger services are to move to the EU's Public Service Obligation model, with the state commissioning and compensating services through contracts. The first PSO contract is targeted for December 2027, subject to enabling legislation. Contracts of up to 15 years would become possible once the relevant market has opened.

The war still limits near-term private entry. First Deputy Infrastructure Minister Serhiy Derkach told an EU integration forum in Lviv last month that security risks leave foreign operators with little appetite to enter Ukraine, even on standard gauge, while wartime conditions complicate the long-term financing new entrants need. He said the roadmap nonetheless contains a step-by-step timetable with a "specific deadline for opening the market".

Where does opposition stand?

Business pressure for liberalisation is measurable: in the European Business Association's latest Infrastructure Index, 59% of respondents named opening the rail market to private traction a priority, 56% backed ending passenger cross-subsidies, and 53% cited UZ unbundling and infrastructure rationalisation.

Political resistance remains. Parliamentarian Yulia Sirko said in September there are still insufficient votes in the Verkhovna Rada for full market opening. During a parliamentary debate over the summer, MP Maksym Zaremskyi argued railway traction should stay in state ownership on national security grounds, calling potential de-nationalisation under current conditions "premature".

With separation deadlines in 2027, corporate restructuring by 2029 and standard-gauge opening set for 2031, the roadmap gives operators, investors and EU negotiators a fixed sequence against which to measure Ukraine's progress once legislative work begins.