Countries in the region look for investments to improve their railway systems and make freight railway companies profitable.
By Kruno Kartus for Southeast European Times in Osijek -- 06/09/2013
Romanian Railroad Group won the tender for 51 percent of CFR Marfa shares. [Gabriel Petrescu/SETimes]
While some countries decided to solve the problem by selling the state-owned stakes of the freight railway companies, others rely on foreign investments and hold the companies in the state ownership.
Croatia and Romania plan to privatise their freight railway companies, handing the biggest part of countries' railway transport to private ownership for the first time in the region.
In May, Croatian government accepted an offer from SC Grup Feroviar Roman SA of Bucharest to buy a 75 percent share of state-owned HZ Cargo that unites several companies. One of them is Agit, which organises rail freight among Croatia, Serbia and Bosnia and Herzegovina (BiH). In the first half of this year, Agit transported 1.8 million tonnes of cargo.
A Romanian investor offered 30 million euros for the repayment of loans secured by state guar-antees and 10 million euros as working capital to partially pay suppliers, salaries and other op-erational needs. The company has to provide the payment within 30 days of signing the contract. In addition, SC Grup Feroviar Roman SA will invest 20 million euros in railway cargo through modernisation of the rolling stock.
"For each of the negotiating points, dealing with financial matters, appropriate bank guarantees will be required," Renata Ivanovic, spokesperson for the Ministry of Maritime, Transport and Communications told SETimes.
According to the ministry, the Romanian company also offered to pay the remaining long-term debt of HZ Cargo, extend its business and keep at least 1,100 of company's employees after re-structuring the organisation. Croatia's government is expected to start negotiations with the com-pany in mid-September.
Despite heated public debates and accusations among politicians over the state-owned CFR Marfa, Romania's government approved its privatisation in February, following the requests of the International Monetary Fund.
In June, the Romanian Railroad Group won a tender offering 202 million euros for 51 percent of CFR Marfa shares.
Economic analyst Ilie Serbanescu said that with the good management, CFR Marfa had enough potential to be profitable and privatisation was not necessary.
"Clearly, CFR Marfa is a strategic company that must not be privatised," Serbanescu told SETimes. "It is a stupidity forced by IMF... it does not abide by the golden rule of privatisation: if a company is not viable under state administration, it is privatised to make it profitable. In the case of CFR Marfa, the company does not have problems... it is not bankrupt but is being forced into bankruptcy."
"AOAR [Romanian Businessmen Association] supported the granting of a management contract to [the Romanian Railroad Group] with a precise objective to capitalise the company in four years. This was also the objective of IMF," AOAR president Florin Pogonaru told SETimes.
Officials at the railroad wanted to operate in Bulgaria as well, but in June, Bulgaria's Privatisation Agency suspended procedures to privatise the Bulgarian railways' freight transportation unit. Transport Minister Danail Papazov explained that he is not opposed to the sell-off of the deeply indebted company, but at the moment it can only be sold for "pennies."
Serbia's government is considering privatisation of railways, but is still trying to get loans and attract foreign investments to improve the situation and restore the railroad.
In May, Serbia signed $800 million loan agreement with Russia, which will be implemented over the next five years. In July, another 78 million euro agreement was signed on the renewal of railway telecommunications systems with a Chinese company.
"Serbian Railways will be refurbished in the next five years and will increase the speed of trains on the main railway routes - Corridor 10 and the Bar line," Nenad Stanisavljević, director of the Media Centre of the Serbian Railways told SETimes, adding that by the end of this year Serbian Railways will negotiate with Kuwait and the Czech Republic on new investments.
Correspondents Gabriel Petrescu in Bucharest, Tzvetina Borisova in Sofia and Bojana Milovanović in Belgrade contributed to this report.
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