PKP files countersuit against Adtranz
Polish State Railways (PKP) filed a countersuit against one of the country's leading train producers, Adtranz Pafawag, last week.
PKP is charging the Wroclaw-based company with failing to deliver on a five-year-old $150 million order to supply PKP with 50 state-of-the-art locomotives.
Under the deal signed at the end of 1996, Adtranz was supposed to deliver the first eight locomotives by 1999. However, PKP officials said the company has failed to deliver a single unit so far.
"We didn't receive the locomotives," said Janusz Mincewicz, press spokesman for PKP Cargo, the PKP subsidiary that oversees the contract with Adtranz. "The contract was not fulfilled."
PKP's court bid comes on the heels of a lawsuit filed by Adtranz late last year over the same deal. Adtranz management charged PKP with failing to keep up with a payment schedule outlined in the original contract. The company said it has 32 locomotives at its Wroclaw factory ready for delivery.
"(The locomotives) aren't running because PKP is in a huge financial crisis and doesn't have money to pay for them," said Miroslaw Szelezinski, president of Adtranz Pafawag.
To date, PKP should have paid zl. 400 million ($97.6 million) to meet its contractual obligations, Szelezinski said. Adtranz has also accused PKP of changing the terms of the agreement after the deal was signed, for example by reducing the number of locomotives on order from 50 to 31.
For its part, PKP officials said they have already paid out zl. 64 million ($15.6 million) to Adtranz Pafawag and have received nothing in return. They also claim that because of the delay in delivery, PKP was forced to slice 19 locomotives from the original order.
The companies spent two years in negotiations before turning to the courts. "Adtranz went for this move because normal negotiations didn't end in anything substantial," said Han Tjan, senior vice president of corporate communications based at Adtranz' Berlin headquarters.
Szelezinski said he hopes the court case will lead to a speedy resolution of the conflict. "Each month means enormous losses," Szelezinski said. "The lawsuit forces the parties to act decisively."
PKP is embedded in a long-awaited restructuring process aimed at paving the way for the privatization of the beleaguered state-owned enterprise. During the past couple of years, financial woes at PKP have become an increasing burden on the national purse strings. Last year alone, publicly subsidized PKP reported gross losses of zl. 1.26 billion ($30 million) for the first nine months of the year. PKP had zl. 6.67 billion ($1.62 billion) in outstanding debt at the end of September.
Adtranz has not had an easy go since entering the Polish market in 1996. Apart from the conflict over the rolling stock order, in 1998 the company lost out to a subsidiary of Italy's Fiat in a coveted tender to produce high-speed trains worth zl. 897 million ($218 million).
But Adtranz is not alone. According to Henryk Klimkiewicz, president of railway consultant TOR, PKP's financial crisis has created problems for other international companies such as Alstom and Greenbrier, which have invested in Poland's railways. "When these companies came to Poland, they expected demand on the domestic market," Klimkiewicz said. "There's a real danger that these companies will be limiting their production capacities and closing down their factories in Poland."
Because of problems at PKP, no rolling stock producer in Poland has seen any big orders for the past 10 years, Klimkiewicz said.
In 1999 Adtranz Pafawag registered losses of zl. 50 million ($12.2 million). Szelezinski said that the battle with PKP may lead Adtranz, which has invested $40 million in Poland and whose owners are DaimlerChrysler and Bombardier of Canada, to pull out of the market.
