Bill to privatize ailing PKP is stalled in parliamentary committee
The draft bill on restructuring and privatizing ailing Polish State Railways (PKP) has become bogged down in a parliamentary committee, potentially pushing its passage well into the second quarter of 2000.
Deputies on the Sejm's transportation committee want the government to amend the legislation, especially in regard to how PKP's infrastructure will be managed and how to deal with its zl. 5.5 billion ($1.3 billion) debt load, before they will send it out for a vote by the full house. Both deputies from the opposition Democratic Left Alliance (SLD) and the government's Solidarity Election Action (AWS) have balked at provisions in the bill.
"The government has recommended a bill that will not be supported," said former Transport Minister Boguslaw Liberadzki, a Sejm deputy from SLD and a member of the transportation committee.
The legislation, introduced in the Sejm in September, says that PKP should be divided into separate companies, such as freight, passenger and infrastructure concerns. These separate entities would then be grouped under a holding company called PKP. The infrastructure arm would be called Polskie Linie Kolejowe. Deputies are worried the plan for PKP's infrastructure could result in the government losing control of the rails. "The bill assumes that infrastructure will be split up," Liberadzki said, because it states that the government will control not less than 51% of votes in the company, but not necessarily its assets. This paves the way for a strategic investor to come in, he added. Deputies are against such a scenario because they say it could lead to a dramatic rise in costs for rail users.
"I don't see too many (supporters for an infrastructure takeover), besides experts or a few private companies, which are connected with PKP, and they are just losing the ground under their feet," said Henryk Klimkiewicz, president of Zespol Doradcow Gospodarczych TOR (ZDGT), which has consulted on PKP's privatization.
Sejm deputies are not against the full-scale privatization of the railroad's operations sector. They are in support of the plan to create separate passenger and freight divisions that would compete with other private operators. All operators would have access to the rails and would be charged fees by the infrastructure company.
Liberadzki did not entirely rule out eventually selling the infrastructure company to a strategic investor in the future. "At some point, yes," he said. But property issues must be worked out, such as whether certain pieces of real estate belong to PKP, local administrations or to nobody at all.
"I think that the state has to have control of the infrastructure," Klimkiewicz said.
Another point of contention for parliamentarians is PKP's debt, which currently stands at zl. 5.5 billion ($1.3 billion). Some transportation committee deputies want this debt, particularly that owed to the Treasury Ministry, to be forgiven.
The reason behind this, Liberadzki said, is that any strategic investor that buys into the railroad will have to take over that debt, eventually causing capital to go to debt servicing and not to investing in the railroad itself. "In fact, it will be a discouragement" for strategic investors, he said. The government's plan, as outlined in the legislation, is to conduct a debt-for-equity swap in PKP.
While the legislation is stalled for the moment, Liberadzki said it was not dead and would not likely need to be resubmitted. However, he is not expecting any movement on it until late January or early February when some lobbying will be done and changes introduced. Then, it is possible that it could be passed by the Sejm in March.
Even such a small delay is a problem for PKP, however, which currently loses about zl. 5 million ($1.2 million) a day.
"Postponing in time will cause eventual problems as well," Klimkiewicz said. "Is the country able to cover monthly losses of zl. 150 million ($35.7 million)?"
Even if deputies reach agreement, there are still risks that PKP's unions might fight the plan, or that the railroad will not be able to pay its employees. "Every month, it is a risk," Liberadzki said of payroll.
