Issue 3 - August 2006

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Eurotunnel granted protection from Paris Commercial Court

In its judgment of 2 August 2006, the Paris Commercial Court decided to place Eurotunnel and the 17 companies concerned under the “Safeguard procedure” (as defined by French law n° 2005-845 of 26 July 2005).

After talks to avoid bankruptcy failed, on 13 July 2006 the Channel Tunnel operator had asked the French court to freeze its £6.2 billion of debts so it could continue its cross-Channel operations while a court-administered survival plan was worked out.

The troubled company, aided by two judicial administrators, has a six-month period to restructure its finances and strike a deal with its creditors. Jacques Gounon, Eurotunnel Chairman and Chief Executive said, “In a difficult context, the Paris Commercial Court has made a positive decision which will protect the business and the public service which it operates”.

(Source: Eurotunnel)

Management of Uganda Railways Corporation dissolved

Works and transport minister in Uganda, John Nasasira replaced the previous management of Uganda Railways Corporation (URC) by three interim managers, who are to oversee the transfer of the corporation to the Rift Valley concessionaire. The new management team includes officials from Canac, the government’s Canadian advisors, Railways Africa reported on 20 July 2006.

More than 1,200 URC employees will lose their jobs but were promised redundancy packages paid immediately.

Both Kenya and Uganda railways corporations were handed to Rift Valley Railways Corporation who took over operations on 1 August 2006. According to the New Vision newspaper, Nasasira said as part of the concession, some of the support services will be outsourced to small and medium enterprises set up by the former employees.

(Sources: Railways Africa, New Vision)

Shake-up plans for transport companies in Thailand

The Thai finance ministry proposed restructuring three transport companies among five loss-ridden state enterprises to ease the burden on the government's budget, according to Chaiyos Sasomsap, a caretaker deputy finance minister, cited by the Bangkok Post on 24 July 2006. The Bangkok Mass Transit Authority (BMTA), the State Railway of Thailand (SRT) and the Mass Rapid Transit Authority of Thailand (MRTA) were reported to have serious financial problems.

The SRT currently has accumulated losses of around 100 billion baht (US$2.66 billion), of which half consists of outstanding loans and the rest employee pensions. The SRT's losses are legally required to be offset by the fiscal budget.

A ministry source quoted by the same journal said the study recommended the BMTA should reroute its public buses, the SRT develop its land assets, whereas the MRTA, the Bangkok subway operator, focus on debt restructuring.

(Source: Bangkok Post)

Research backs RMT view that high fares in Great Britain deter rail use

RMT general secretary Bob Crow said that following railway privatisation in Great Britain, rail fares were allowed to rise above inflation. He called on the government to institute a review to reduce fare levels, simplify ticketing structures and encourage a shift from private car use to environmentally-sustainable rail use.

A House of Commons Transport Select Committee report on fares released in May 2006 also concluded that the present fares system was driven by profit rather than the needs of passengers, according to the RMT website.

(Source: RMT)

Tories admit BR break-up was wrong

Privatising the railways in Great Britain has led to higher running costs, the Conservative Party admitted on 17 July 2006. The RMT rail union dismissed the opposition party’s plans announced for the re-privatisation of the track and the break up of the national network.

"It's a bit rich for the Tories, who wreaked such havoc when they smashed up British Rail and handed it over to the private sector, to now call for the re-privatisation and fragmentation of rail infrastructure," RMT general secretary said.

The plans were announced following an admission by Tory leader David Cameron that splitting responsibility for trains and tracks was a fundamental error when the Tories privatised the railways.

(Source: RMT)

EU still pushing for rail reforms

On 22 June 2006 the European Commission adopted a 'Communication' on transport policy, finding that change in the European transport sector is much slower than anticipated, with no appreciable shift in the share of rail and road traffic expected until 2020.

Railway Gazette International quoted Zolt n Kazatsay, Deputy Director General at DG Tren, who told the Rail Freight 2006 conference in London on June 7 that the Commission would introduce 'new thinking' in transport policy over the next five years, with more emphasis on new technologies. Kazatsay made it clear that “rail remains at the heart of EU transport policy”. Although “rail represents only 10% of total transport activity in Europe”, he said it had “a larger importance than that”, particularly in specific corridors and in serving the hinterland of major ports.

(Source: Railway Gazette International)

Rail concession in Nigeria starts

The Bureau of Public Enterprises launched the proposed concessioning of the Nigerian Railway Corporation (NRC) as two separate operational projects. A shortlist of pre-qualified bidders is due to be announced at end of August, with formal bids invited in September.

According to Railway Gazette International, NRC's existing 3506 km network is to be split into two concessions, each focusing on one of the two main ports. The concessionaires will be expected to maintain, operate and develop the networks, including infrastructure and rolling stock. Non-core assets will remain with NRC or be transferred to the Railway Property Co Ltd.

Following the retrenchment of 7000 employees in September 2005, NRC has around 6000 staff.

(Source: Railway Gazette International)

Spanish Comsa moves freight in Poland

Spanish construction company Grupo Comsa announced on May 23 that its subsidiary PRKil had begun open access freight operations on the Polish national network, according to Railway Gazette International.

A total of 77 operating licences have been granted for the Polish network since 2003, of which 27 are for passenger operations. Comsa Rail Transport became the first private company to be issued with a licence to operate freight trains on the Spanish national network in September 2005, but it has yet to start operations pending enactment of the necessary legislation.

(Source: Railway Gazette International)

Subsidiaries progress RZD reforms

Railway Gazette International reported that the Russian Railways' Federal Passenger Board, which has been established as an early priority for the third stage of the RZD reform programme, started its operations on 1 July 2006.

The reform of RZD's passenger operations is based on splitting the commercial and social services into separate businesses. According to the head of the FPB, Valeri Shatayev, social and regulated services currently account for 66% of RZD's passenger-journeys and 45% of the revenue. But despite increased traffic levels in 2005, RZD only covered 73% of its passenger operating costs, recording a loss of 27bn roubles.

On 13 July 2006 the RZD Management Board also approved plans to set up a subsidiary freight business which would become operational on January 1 2007. This is intended to guarantee the competitiveness of RZD freight operations and ensure financial transparency, ending cross-subsidies between business units.

(Source: Railway Gazette International)

New railway companies in Egypt

In a bid to better use the assets of the Egyptian Railways Authority (ERA), the Egyptian Company for Railway Projects (ECRP) set up three new subsidiaries to carry out railway transport projects, Business Today Egypt announced.

The freight transport will be the responsibility of Egyrail, with authorised capital of LE100million and issued capital of LE2.6m. The Orascom group holds a 31% stake in Egyrail, with 39% owned by Egytrans and the remaining 30% divided equally between ERA and ECRP.

Seatrain Egypt, with investments worth LE7m, is to develop, operate and market first-class sleeper trains in conjunction with Belgium’s Ra Concept and its local representative in Egypt, Alk.

The government will contribute LE8m towards the partnership between the ministry of transport and the Al-Kharafi Group in the third company, a venture with a capital of LE400m.

In May 2006, the Egyptian minister for international cooperation announced that the World Bank had agreed to a loan of $US270 million to be used for development projects in the Egypt’s rail network in 2007 and 2008, according to Railways Africa.

(Sources: Railways Africa, Business Today Egypt)

If you have any feedback, please contact Gabriel Craciun, ITF Senior Researcher (railinfo@itf.org.uk)

Related documents:
Railway News Issue 3 (33kb PDF)

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