Railing against it
In the 1980s Polish Railways (PKP) was ranked among the biggest rail companies in Europe. Now only Lithuania and Greece, which have almost non-existing railway networks, have fewer railway journeys per resident than Poland. A new report claims that in 2005 PKP recorded a further fall in passenger transport by six percent. What is more, it alleges that one of PKP Group's subsidiary companies, PKP Przewozy Regionalne (PKP PR), is cadging subsidies from local governments. The report was prepared by Centrum Zrównoważonego Transportu (Balanced Transport Center - CZT), a program within the Stowarzyszenie Zielone Mazowsze (Green Mazovia Association - SZM), whose objective is to promote and support environmentally friendly forms of transport. PKP PR claims that the accusations are slander and plans to take the case to court.
Declining rail travel
"The railway in Poland is being marginalized. Its condition now is much worse than it was under the rule of Władysław Gomułka [the first secretary of the communist party in the 1950s and 1960s]," said the head of the railway project at CZT and the author of the report, Stanisław Biega. He pointed to irritating problems such as closed ticket offices, a lack of functioning waiting rooms and delayed trains.
In the report, he tries to prove that because of its mismanagement, PKP PR is responsible for the decline in rail travel in Poland, especially considering other railway companies, such as Inter City, SKM and WKD, increased passenger numbers in 2005.
Financial sink
One of the report's major charges against PKP PR is that it wants to squeeze zł.200 million in subsidies from local governments. CZT claims the rail company estimates its losses in regional railway traffic will reach zł.600 million by the end of 2006. This is also the amount in subsidies the company can ask for. However, the total sum of subsidies applied for by PKP PR in particular voivodships amounts to zł.800 million. CZT accuses PKP PR of trying to wangle an extra zł.200 million.
The report also alleges that there are a number of income sources that PKP PR does not include in its revenue accounts, in order to obtain a higher subsidy. These sources are said to be the bulk-buying of tickets by companies and institutions for their employees, and income from credit notes and network tickets. According to the report, these sums could reach 10 percent of the company's total revenues.
Constant demands
CZT also claims that PKP PR impedes local governments' control of passenger trains. Biega claims that the company has failed to present documents approving the revenues of the regional units in the company's accounts. At the same time, Biega stresses, the company has constantly demanded additional subsidies from the government and local authorities. "PKP PR is not interested in transporting passengers but only in getting subsidies," says Biega.
The report shows that PKP PR's share in the country's passenger transport is systematically falling - from 80 percent in Q2 2004 to 63 percent in Q2 2005. CZT representatives claim that PKP PR is likely to lose its dominant position in the passenger transport market.
CZT has already given their report to the Supreme Chamber of Commerce (NIK) and handed in a claim to execute control in PKP PR. NIK now has a month to consider the claim and make a decision.
Slanderous allegations
PKP PR strongly rebuts CZT accusations, considering them slander. "The accusations are false and they undermine the company's reputation," said PKP PR spokesperson Łukasz Kurpiewski. "We have informed the Prosecutor's Office about a crime being committed."
A major controversy in the case is that CZT stresses PKP PR's reluctance to reveal their financial data, which, it claims, is prepared in an inconsistent and unclear fashion. The rail company, however, points out that its reports are published on the company's website and says CZT never asked it for any information. CZT confirms this and admits that it based its report on data from the media, internet and other sources.
A spokesperson from PKP SA, Michał Wrzosek, believes that the CZT report is a result of a misunderstanding and lack of knowledge of PKP PR's accounting systems. "The financial mechanisms of Polish Railway in general are very complicated and very often they escape the traditional accounting rules," says Wrzosek. In an effort to rebut some of CZT's accusations, Wrzosek points to the fact that the decreasing number of passengers on the regional carriers is typical for many countries in Europe, and that the situation is changing in Poland.
Bungled privatization
PKP PR was launched in 2000 following the Bill on Commercialization, Restructuring and Privatization of the State Enterprise PKP, of September 8, 2000. The Bill divided the railway's privatization into two stages. In the first, 11 subsidiary companies were established (PKP PR being one) and capital was passed to them. In this way the PKP Group was created, in which the dominant position is held by PKP SA. The second stage of the process involved the gradual privatization of the 11 new companies. However, this has only happened to Warsaw's WKD, which was privatized last year, and the rest remain state-owned.
Polish Railways has a zł.6 billion debt. The Ministry of Transport and Construction announced that it plans to improve the financial condition of the PKP Group through supporting new investment with EU funds, improving the railway's management system, and creating a new system of organization and financing regional transport.
