PKP privatization bill running late
Railroad watchers expressed doubts last week that the bill on restructuring, commercializing and privatizing Polish State Railways (PKP) will be passed by the end of June.
"I don't think there is a chance (of the bill being passed) until the end of September," said former Transportation Minister Boguslaw Liberadzki, a Democratic Left Alliance (SLD) Parliament member who sits on the transportation committee, where the bill is currently located. After that, there will be another three-month period before the passed act becomes law.
Last week, the railroad's Solidarity union gave Parliament until late June to pass the PKP bill. Failure to do so will lead the 50,000-strong union to strike, said Stanislaw Kogut, president of PKP's Solidarity union and a member of PKP's management board.
"For sure," Kogut said about a possible strike if the bill is not passed.
Kogut also noted that the railroad's dire financial situation has continued for two and a half years. "The railroad is on the verge of bankruptcy," he said.
But Henryk Klimkiewicz, president of rail consulting company ZDG Tor, expressed reservations about the union's stand on the bill. He said that while unions may say they are for the bill, "it is not clear what bill they support."
"I think they are playing a game," Klimkiewicz said. "They have gotten an assurance from the transportation minister that layoffs will not happen until the bill is passed."
But there is no guarantee that the bill will be accepted by the end of June, which means that the firm's restructuring is also withheld. Ultimately, this will lead to more financial difficulties for the railroad, which lost an estimated zl. 2.27 billion ($582 million) in 1999 and was rated as having the biggest losses out of the 500 largest Polish companies in the Polityka weekly's May 6 survey.
The bill on reforming the ailing railroad was introduced to Parliament in September 1999 but has since been stuck in the transportation commission, due mainly to issues over personnel downsizing.
As part of its restructuring, PKP must reduce its 189,000-strong personnel.
The main issues right now, according to Liberadzki, are how compensation of laid-off personnel will take place and who will foot the bill.
Another concern is the disposition of concessions for shipping via rail granted by the Transportation Ministry in the mid-1990s to other operators. Of particular concern is the privatization of tank car company Dyrekcja Eksploatacji Cystern (DEC), which is separate from PKP, owns over 11,000 tank cars and has a more than 90% share of the country's fuel distribution via rail. If DEC is privatized, PKP might have to face stiff competition while trying to reform itself.
"It (DEC's privatization) is dangerous for PKP, it can totally undermine the PKP position," Liberadzki said.
Last Thursday was the final day for the submission of final bids for DEC. The Business Journal has learned the companies selected to make bids are Cargo Central Europe; U.S. tank-car leasing company GATX; Wisconsin Central Transportation Corporation; and German tank-car leasing company VGG.
One step toward actually privatizing PKP is the search to find an operator of light-rail line Warszawska Kolej Dojazdowa (WKD), which runs to Grodzisk Mazowiecki and Milanowek. Although a part of the PKP network, the line is de facto independent, running on its own right of way and covering up to 60% of its costs from fare box recovery.
Two weeks ago, an announcement appeared in the national daily Rzeczpospolita, stating that PKP is looking for partners to operate passenger services on WKD, introduce new rolling stock, and manage and modernize the line's infrastructure. One interested party is Rail Polska "in association with strategic partners, who will be named in due course," confirmed Rail Polska Vice President Richard Cottrell.
"We are, of course, interested," said Michel Juchnowski, assistant to the director of CGEA Transport in Poland. While Juchnowski could not say specifically what other firms might be interested in WKD, he did note that large firms involved in railroads would also be sending letters of interest.
"For sure there will be big interest," he said.
Both companies declined to state how much they would invest in WKD.
