PKP to restructure

   The government in 2000 finally paved the way for the privatization of beleaguered Polish State Railways (PKP), allowing the company to be split into at least 12 different entities. Except for the company that will own the railway tracks, all will be sold to a host of private investors.

   While the government intends to start selling the individual companies – which include everything from freight transport to suburban railways – no earlier than 2002, the passing of a law this year that allowed the railway to be broken up was seen as a major move forward. The government has grappled with the railway's privatization for the past two years, debating with the labor unions on how much the loss-making company will pay its laid-off employees. A strain on the nation's finances, publicly subsidized PKP reported a gross loss of zl. 1.26 billion ($274 million) for the first nine months of this year.

   "Transforming the state-owned company into a commercial entity and later privatizing most of the resultant companies is the only possible method for PKP to exist and develop in current economic conditions," said Roman Hajdrowski, PKP's press spokesman.

   PKP is expecting that it will be transformed into a commercial entity on Jan. 1, 2001. By mid-2001, PKP will split into separate companies. Those will include: Polres to deal with express and intercity trains, Elektroenergetyka Kolejowa to function as a power company and Teleinformatyka Kolejowa to manage telecommunications. Smaller companies will be divided and privatized first, PKP said. As part of its restructuring process PKP is looking to the European Bank for Reconstruction and Development (EBRD) and the World Bank to provide zl. 1.1 billion ($239 million), said Krzysztof Celinski, president of PKP. In addition, PKP hopes to raise zl. 1.7 billion ($370 million) by issuing bonds, Celinski said.