PKP goes under the knife
He said a four-day pay strike of PKP engine drivers two weeks ago, which crippled transport across the country, showed how urgent it was to overhaul the loss-making firm in which little had changed since the fall of communism in 1989. PKP is expected to lose zl. 1 billion ($289 million) in 1998.
"Just days ago, I would have said that the year 2005 should be the target (for privatization)," Janik told Reuters. "Now, after the strike, I think it should be sped up ... We can assume privatization can happen in 2001 or 2002."
He said the privatization plans would have to be approved by the government and Parliament.
"I take it that Parliament will pass a bill on restructuring ... of PKP by the end of September," he added.
Under the restructuring plan, PKP will be divided into many separate firms, controlled by a mother company, and each will have to show a profit or eventually perish, Janik said.
One firm will be in charge of freight, others in charge of passenger trains, infrastructure and other areas," he said.
"PKP is now a state within a state - we have our own health care system, schools, holiday centers and what not ... These activities have to be separated from our core business, which is railway transport," he added.
Janik said it would be up to the government to decide whether PKP's mother company would be privatized, possibly through a public offering on the Warsaw Stock Exchange (WSE), or whether its daughter firms will be sold - to strategic investors or also offered on the stock exchange.
"In my view the state should sell controlling stakes in the firms, with the exception of the company in charge of the railway infrastructure," he said.
He also said, without going into details, that the 218,000 people the railway employs would have to be drastically reduced. He said PKP was deep in the red mainly due to loss-making passenger services.
"Returns from tickets cover most of the costs of Eurocity and Intercity express trains. But in the case of local trains only less than 20% of the costs are covered by tickets," he said.
PKP's loss is likely to mount to zl. 1 billion in 1998 ($290 million) from last year's zl. 80 million ($25 million), mainly due to fewer orders for coal shipments. Its sales were zl. 9.7 billion ($3.03 billion) in 1997.
Janik said that under the future system, local government authorities should subsidize passenger rail routes. Local governments would have to decide whether particular rail routes should exist and open tenders for providing transport services on them. "Under the current law, PKP will be just one of the entities bidding in these tenders," he said.
During last week's strike the transport ministry awarded the first licenses for nationwide railway services to independent operators, as envisioned by the 1997 law, which provides for gradually moving away from PKP's monopoly.
Janik said that last year PKP had to inject zl. 2 billion from its profit on freight trains into passenger services. The government's subsidy of zl. 560 million ($161 million) this year will cover just 16% of these costs. He said that PKP, which is technologically about eight years behind Western railways, should spend some zl. 62 billion ($17.86 million) in eight years on modernization and restructuring.
"I estimate that between 15-20% of this sum can be covered from our own funds. The rest would have to come from credit," he said.
Janik said PKP was preparing a $1-billion eurobond issue to finance purchases of rolling stock. The first $200 billion tranche was likely to be placed late this year or early in 1999.
Reuters, , contributed to this story.
"Just days ago, I would have said that the year 2005 should be the target (for privatization)," Janik told Reuters. "Now, after the strike, I think it should be sped up ... We can assume privatization can happen in 2001 or 2002."
He said the privatization plans would have to be approved by the government and Parliament.
"I take it that Parliament will pass a bill on restructuring ... of PKP by the end of September," he added.
Under the restructuring plan, PKP will be divided into many separate firms, controlled by a mother company, and each will have to show a profit or eventually perish, Janik said.
One firm will be in charge of freight, others in charge of passenger trains, infrastructure and other areas," he said.
"PKP is now a state within a state - we have our own health care system, schools, holiday centers and what not ... These activities have to be separated from our core business, which is railway transport," he added.
Janik said it would be up to the government to decide whether PKP's mother company would be privatized, possibly through a public offering on the Warsaw Stock Exchange (WSE), or whether its daughter firms will be sold - to strategic investors or also offered on the stock exchange.
"In my view the state should sell controlling stakes in the firms, with the exception of the company in charge of the railway infrastructure," he said.
He also said, without going into details, that the 218,000 people the railway employs would have to be drastically reduced. He said PKP was deep in the red mainly due to loss-making passenger services.
"Returns from tickets cover most of the costs of Eurocity and Intercity express trains. But in the case of local trains only less than 20% of the costs are covered by tickets," he said.
PKP's loss is likely to mount to zl. 1 billion in 1998 ($290 million) from last year's zl. 80 million ($25 million), mainly due to fewer orders for coal shipments. Its sales were zl. 9.7 billion ($3.03 billion) in 1997.
Janik said that under the future system, local government authorities should subsidize passenger rail routes. Local governments would have to decide whether particular rail routes should exist and open tenders for providing transport services on them. "Under the current law, PKP will be just one of the entities bidding in these tenders," he said.
During last week's strike the transport ministry awarded the first licenses for nationwide railway services to independent operators, as envisioned by the 1997 law, which provides for gradually moving away from PKP's monopoly.
Janik said that last year PKP had to inject zl. 2 billion from its profit on freight trains into passenger services. The government's subsidy of zl. 560 million ($161 million) this year will cover just 16% of these costs. He said that PKP, which is technologically about eight years behind Western railways, should spend some zl. 62 billion ($17.86 million) in eight years on modernization and restructuring.
"I estimate that between 15-20% of this sum can be covered from our own funds. The rest would have to come from credit," he said.
Janik said PKP was preparing a $1-billion eurobond issue to finance purchases of rolling stock. The first $200 billion tranche was likely to be placed late this year or early in 1999.
Reuters, , contributed to this story.
