Ulaanbaatar Railway has raised its freight charges from
September 25. Some economists fear that, coming at the same time as increased
salaries for state employees, this move would lead to a rise in inflation.

The Railway had decided on the revised rates in January
but permission from the Government Coordinating Agency came only recently.  The Fair Trade Practice Office had earlier
criticized the Railway for increasing passenger fares without first clearing it
with the Government, so this time the issue was sent to the Agency for
approval.

In announcing the increase, the Railway said the bulk of
Mongolia’s import through it comprised wood, wooden products, oil, food and
building material, while coal was the main export. Total freight volume was 15
million tons in 2009, of which 5 million tons was coal. Coal is the most
uneconomical product to transport as the existing rate is MNT15 for a ton. The
proposed 10%-30% increases will not mean any profit for the Railway, but will
only bring down the loss.

The Railway said
its accumulated losses made things difficult for its 16,000 workers but no
action could be taken after considering the likely negative effects on the
national economy and consumers. It has said rates would not be increased again
in 2010 but people have to wait and see what impact the present rise will have
on retail prices and on services like heating and power generation.