PKP needs euro 14.6 bln to upgrade to European Union norms

Polish State Railways (PKP) needs at least euro 14.6 billion to adapt itself to European Union standards. Yet, it can only spend zl. 1 billion a year, which makes restructuring virtually impossible. The company, with debts exceeding zl. 1.250 billion, has already reduced the maintenance works. It is not able to pay for its services and faces the risk of having its electricity cut off. Moreover, it is in danger of a major strike unless it grants all its laid-off workers severance packages. However, the bill expected to solve the problem is not likely to take effect even in the remote future. The major bone of contention in the debate is the access of private capital to railway infrastructure and the amount of severance packages. PKP will reduce its workforce from 195,000 to 145,000 and each laid-off worker will get about zl. 15,000. The money needed, now estimated at zl. 4.6 billion, will come from bonds the company will issue and from loans. Also the government is planning to reduce a part of PKP's debt, and is strongly in favor of privatizing the firm. A part of the cost of restructuring would be covered by the money coming from railway infrastructure whereas the money from privatization would be used to pay off the debt. (Rzeczpospolita, page B1) J.K