Ministry mulls splitting light rail from PKP
WKD, which runs from the center of Warsaw to outlying suburbs, is one of the simplest parts of the railroad to split off, railroad officials said, because of its small size and relatively independent structure. "This is the only railroad (in Poland) that is easy to privatize," said Henryk Wasilewski, a member of PKP's press department.
But while the terms "experiment" and "research" have been applied to the planned separation, Wieslaw Jarosiewicz, vice director of the railroad department within the Transport Ministry, said WKD's separation is "a normal road to privatization."
Jarosiewicz said splitting off the light rail will enable it to track its own costs and revenue, which currently are mired with PKP's, and find its own potential investors. "I think it will be much better," he said.
Although WKD essentially operates separately from PKP, the state network controls the light-rail line's purse strings. PKP's sorry financial state has kept it from investing much money into developing the light rail system. In 1998, the entire PKP network lost zl. 1.37 billion ($391.4 million). Losses for 1999 could reach as much as zl. 2.5 billion ($625 million).
The ministry's commission will look into the idea in coming months and also assess what improvements need to be made to WKD's infrastructure. "January, February, March will give us an idea on what to do with this firm," Jarosiewicz said. He emphasized the desire on the part of the ministry to keep it running.
Actual privatization of WKD would happen later, possibly in 2000. However, any decision is contingent on how things turn out in coming months, and Jarosiewicz said a potential price tag for the railroad has not been determined yet.
Stanislaw Kaczorowski, deputy finance director for WKD, said there are several ways the light rail could be privatized. It could be sold to a strategic investor, franchised or turned into a city-owned company. Several transport companies have been eyeing the light-rail line, sources close to PKP said last week, such as French company CGEA Transport, and Scotland-based Stagecoach.
"It's a good business," said Michel Juchnowski assistant to the director of CGEA Transport in Poland. He pointed to the light rail's increased passenger traffic and the ongoing commercial development in Grodzisk Mazowiecki, a suburb the line connects with the city center. But while Juchnowski said CGEA would be interested if the railroad were put up for sale, he could not say how much it would pay.
Ridership on the line has increased steadily in recent years and now hovers around 30,000 passengers daily, Kaczorowski said. The light rail is having trouble keeping pace with that growth, and some of its infrastructure, such as signaling equipment and rolling stock, needs to be replaced. Thirty thousand passengers are "a lot for the trains that are running," Kaczorowski said.
One problem is the age of the trains running. Most are close to 30 years old and are powered by electricity, which makes them expensive to operate, said Henryk Klimkiewicz, president of independent consulting firm Zespol Doradcow Gospodarczych TOR (ZDGT), which has been active in PKP's privatization plans.
Some segments of track also need to be replaced, as part are so old that they restrict the trains from going any faster than 15 kilometers an hour.
All of that, however, requires cash, which WKD does not have. "They are far more likely to get that" money when they are separate, said Richard Cottrell, head of the Warsaw office of U.S. transport company Wisconsin Central, which wants to become a strategic investor in PKP.
The increased passenger traffic also means that WKD needs to add more trains to its schedule. About 100 trips are made each day on the light rail line, but there should probably be as many as 136, executives said. The light rail will look at adding more connections after it is separated from PKP, said Grzegorz Dymecki, head of WKD's technical section.
WKD also needs to undertake cost cutting and Dymecki mentioned possible solutions, such as unmanned trains or newer rolling stock that would not require so much maintenance.
Financially, WKD fares better than the remainder of Poland's rail network because up to 60% of costs are covered by the light rail's revenue, executives said. That compares with passenger traffic on PKP, for which fares only cover about 30% of operating costs.
But while the terms "experiment" and "research" have been applied to the planned separation, Wieslaw Jarosiewicz, vice director of the railroad department within the Transport Ministry, said WKD's separation is "a normal road to privatization."
Jarosiewicz said splitting off the light rail will enable it to track its own costs and revenue, which currently are mired with PKP's, and find its own potential investors. "I think it will be much better," he said.
Although WKD essentially operates separately from PKP, the state network controls the light-rail line's purse strings. PKP's sorry financial state has kept it from investing much money into developing the light rail system. In 1998, the entire PKP network lost zl. 1.37 billion ($391.4 million). Losses for 1999 could reach as much as zl. 2.5 billion ($625 million).
The ministry's commission will look into the idea in coming months and also assess what improvements need to be made to WKD's infrastructure. "January, February, March will give us an idea on what to do with this firm," Jarosiewicz said. He emphasized the desire on the part of the ministry to keep it running.
Actual privatization of WKD would happen later, possibly in 2000. However, any decision is contingent on how things turn out in coming months, and Jarosiewicz said a potential price tag for the railroad has not been determined yet.
Stanislaw Kaczorowski, deputy finance director for WKD, said there are several ways the light rail could be privatized. It could be sold to a strategic investor, franchised or turned into a city-owned company. Several transport companies have been eyeing the light-rail line, sources close to PKP said last week, such as French company CGEA Transport, and Scotland-based Stagecoach.
"It's a good business," said Michel Juchnowski assistant to the director of CGEA Transport in Poland. He pointed to the light rail's increased passenger traffic and the ongoing commercial development in Grodzisk Mazowiecki, a suburb the line connects with the city center. But while Juchnowski said CGEA would be interested if the railroad were put up for sale, he could not say how much it would pay.
Ridership on the line has increased steadily in recent years and now hovers around 30,000 passengers daily, Kaczorowski said. The light rail is having trouble keeping pace with that growth, and some of its infrastructure, such as signaling equipment and rolling stock, needs to be replaced. Thirty thousand passengers are "a lot for the trains that are running," Kaczorowski said.
One problem is the age of the trains running. Most are close to 30 years old and are powered by electricity, which makes them expensive to operate, said Henryk Klimkiewicz, president of independent consulting firm Zespol Doradcow Gospodarczych TOR (ZDGT), which has been active in PKP's privatization plans.
Some segments of track also need to be replaced, as part are so old that they restrict the trains from going any faster than 15 kilometers an hour.
All of that, however, requires cash, which WKD does not have. "They are far more likely to get that" money when they are separate, said Richard Cottrell, head of the Warsaw office of U.S. transport company Wisconsin Central, which wants to become a strategic investor in PKP.
The increased passenger traffic also means that WKD needs to add more trains to its schedule. About 100 trips are made each day on the light rail line, but there should probably be as many as 136, executives said. The light rail will look at adding more connections after it is separated from PKP, said Grzegorz Dymecki, head of WKD's technical section.
WKD also needs to undertake cost cutting and Dymecki mentioned possible solutions, such as unmanned trains or newer rolling stock that would not require so much maintenance.
Financially, WKD fares better than the remainder of Poland's rail network because up to 60% of costs are covered by the light rail's revenue, executives said. That compares with passenger traffic on PKP, for which fares only cover about 30% of operating costs.
