PKP set for first round of restructuring plans
Polish State Railways (PKP) is set to start its first round of commercial restructuring at the end of the month as part of government plans to eventually fully privatize the state-run monopoly.
A legal statute laying out plans for the company's complete restructuring and privatization is set for Oct. 27. The company then has three months to become a commercial entity, the first stage of plans to sell off the loss-making state firm to a number of private commercial companies.
"Commercializing means the transformation of PKP into a share company, in which the state treasury is the only shareholder," said Roman Hajdrowski, press spokesman for PKP. He said commercial restructuring would be the first step of the process, followed later by privatization. But privatization won't happen earlier than 2003, Hajdrowski added.
On Oct. 13, the PKP council accepted a statute for the future restructured role of the company. From January, the firm will also operate as a holding company for independent entities, Hajdrowski said.
Immediate plans are to split PKP into three companies, but there are also moves to create more, industry sources said. Plans are already underway to create a separate company dealing with express or intercity trains. Also, small companies such as Warszawska Kolej Dojazdowa (WKD) will be created within the PKP holding group.
"They will be privatized first," Hajdrowski said.
He said PKP had been working intensively for some time to meet the deadlines on restructuring. "PKP has been preparing the statutes for (future) companies, and has also been preparing business plans, so solutions can be implemented as efficiently and quickly as possible," Hajdrowski said.
The commercial restructuring program follows recent negotiations with the European Bank for Reconstruction and Development (EBRD) for a e100 million loan. The company is also in talks with the World Bank for an extra $150 million loan.
A preliminary draft of the contract with the EBRD has already been prepared, Hajdrowski said. But he added that talks with the World Bank were still some way off before a loan could be secured.
"The loans will be used to finance the processes connected with restructuring employment," Hajdrowski said. With the privatization of PKP, it's estimated that within two years 30,000 staff out of the current 175,000 workforce will be made redundant, he said. He added that PKP would need zl. 1.1 billion ($241 million) for the restructuring of its employee network.
PKP, which had debts amounting to zl. 6.3 billion ($1.4 billion) at the end of July, said it would repay the loans with bonds it's expecting to issue within the next two years. According to the Oct. 27 law, bonds worth up to zl. 3.9 billion ($848 million) will be issued to repay the loans.
