New Direction to Run Railways Out of the Red

MarjanKoler/STA

After the Referendum, Restructuring

Transport MinisterJakobPrese鈩ikis convinced that thefavourablereferendum result paves the way for the company's rehabilitation - which he believes is crucial. Since the restructuring bill is already in parliament, he expects that it will be passed soon. He has also stressed that the Transport Ministry and the government, working hand in hand with the company's management, would start implementing the plan as soon as it is enacted and embark on financial restructuring to achieve a long-term solution to the railways' troubles. According toPrese鈩ik, the main reason to push for a timely adoption of the act lies in the fact that the railways must gear up to join the common European market in 2004. The restructuring does not mean that the company would be fullyprivatisedin the framework of a holding company, but merely partially. "All functions that provide for the security of the transporters will remain state controlled," he noted.

The referendum, held on January 19, was about whether the railways should remain a single company in state ownership, as the majority of the 9,000 employees desire. The voters turned down the proposal and in effect backed the government's plan to transform the rail operator into a holding company with three dependent companies. Since the proponents of the referendum - the rail trade unions and the workers' council - failed in their bid, parliament can go ahead and pass the act as originally anticipated.

According toMatjaセKnez, the Transport Ministry State Secretary in charge of rail transport, the company in charge of infrastructure and transport management will inadvertently remain in full state ownership. The other two companies - for cargo and passenger transport, respectively - could beprivatisedto 49 percent, while the state would retain a 51-percent stake in them. It will be at least a few years before the company isprivatised, but definitely not before it is cleared of debt, he said.

New Direction into the Right Direction

New Direction is an assemblage of key goals and strategies put forward by the company's management. "This is actually a trade mark of changes due to take place in the Slovenian Railways in the coming years," explainedMiklav鑛/span>. The company is in a serious crisis, he said, with high debts and a serious financial gap. Hence, the 2003-2010 restructuring scheme also includes a financial overhaul plan. According to the plan, the state would convert EUR 139 million of the company's liabilities into a capital supply, while the railways would assume the remaining EUR 152 million of old liabilities. It is also absolutely necessary to gradually reduce the workforce from the current 9,000 to 7,000 by 2010,Miklav鑛/span>underlined.

The company's supervisory board, chaired by the government cabinet's Secretary GeneralMirkoBandelj, unanimously confirmed New Direction just before Christmas. The government committees are expected to review it soon, after which it is to be okayed at cabinet level. "The Slovenian Railways' system and its operations are very complex; all problems remain open,"Bandeljsaid after the failed referendum. Finance Ministry State Secretary Toneni/span>says that the company has been suffering a loss for the past five years; in 2002 alone, it amounted to around EUR 44 million. He therefore believes that the proposed financial restructuring is a "good beginning", but the company's position on the European market will have to come to the forefront in the future.

LjubljanatoVenicein Three Hours

As the company's chairman explained, the main goal of the long-term plan is to make the Slovenian railways a market-oriented, technologically developed and cost-effective rail operator transporting passengers and goods along the 5th and 10th pan-European transport corridors. Even today, all indicators place the company in the upper middle of the family of European rail operators. Most of the difficulties stem from the past,Miklav鑛/span>said, so theprogrammeguidelines deal primarily with the market.

As part of theprogramme, the Slovenian Railways, together with the Italian national railway company, are to start operating an express train betweenLjubljanaandVenice; the latter is a good starting point fortravellingon to the Romance part ofEurope. "The idea is that whenSloveniaenters the EU, it will be possible to get fromLjubljanatoVenicein three hours by train," he said. He also mentioned the establishment of the Ljubljana-Belgrade route, where the plan is to cut downtravellingtime to about six hours.

Budget Funds to the Rescue

Now that the purchase of state-of-the-art express intercity trains and commuters trains namedDesirohas beenfinalised, Slovenian Railways believe it is time to start upgrading its infrastructure, whichMiklav鑛/span>believes needs to be kept "in good shape". It has to be upgraded so that trains will achieve greater speeds, and to eliminate bottlenecks, he added. Since 1999, infrastructure (tracks,signallingequipment and railway stations) has been in direct ownership of the state, which also has to provide budget funds for maintenance contracted out to the Slovenian Railways. Since passenger transport yields virtually no profit (neither inSlovenianor elsewhere), the state is expected to continue tosubsidisetickets for what it considers a public service. Cargo transport, on the other hand, can be a lucrative business.

The Slovenian Railways rely heavily on state funding. Some EUR 26 million of budget funds were allocated to train ticket subsidies last year alone. It has to be noted however, that the state determines the passenger train schedule for inland transport; on most routes, the rail operator generates losses with ticket prices that are also state-capped. Also, over EUR 44 million of state funds were allocated last year for infrastructure, as well as some EUR 30 million for transport management. In addition, the state supplied more than EUR 42 million for investments into the rail infrastructure.

Upbeat Business Results

Business results were encouraging last year. The railways transported 16.3 milliontonnesof cargo in 2002, as opposed to 14.9 million the year before; this is the best result in a decade. By 2010, the amount of cargo shipped is to soar to 27 milliontonnes. Figures for passenger transport growth are a little less impressive. The number of passengers transported last year amounted to 14.7 million, compared to 14.5 million in 2001. In 2010, the annual number of passengers using the railways is expected to climb to 18 million. As a result, income growth in passenger transport is to fall behind that of cargo transport. While income in cargo transport is to go up by 63 percent by 2010 to EUR 228 million, revenues in passenger transport are only to increase by 36 percent in the same period, to EUR 343 million, according to New Direction.