End of rail privatisation in Estonia

On 18 October 2006 Estonia's Minister of Economic Affairs & Communications Edgar Savisaar signed an agreement with Baltic Rail Services (BRS) to re-nationalize Estonian Railway (Eesti Raudtee) by purchasing the remaining 66 percent of the company for 2.35 billion kroons (US$190 million), reported the Baltic Times.

The agreement was later endorsed by the government, who already had 34 percent of Estonian Railways. “Getting the railway back was important from the perspective of both international and regional politics”, said minister Savisaar, quoted by Railway Gazette International.

Baltic Rail Services bought 66 percent of Estonian Railway in 2001 for around 1 billion kroons (US$80 million). The deal that included rolling stock and all Estonia’s rail track was embroiled in controversy. Critics said that it should have remained in state ownership as nationally important infrastructure. Earlier this year, the government had demanded BRS to pay a 958,000 euros fine for allegedly not meeting the terms of the privatisation agreement.

BRS is a consortium made up of the US firms RailWorld Estonia LLC and Railroad Development Corporation (RRDC), Estonian firm Ganiger Invest and the Emerging Europe Infrastructure Fund of the Netherlands.

(Sources: The Baltic Times, Railway Gazette International)


Agreement on DB AG’s future

The German government finally agreed to part-privatise the state railway Deutsche Bahn (DB) by 2009 after months of negotiations around various proposed ways of going ahead, from separation between operations and infrastructure to full privatization. The Financial Times reported that in a compromise that could become a model for the sale of national railways in other European countries, DB will operate transport services, but the 34,000 km rail network will remain state-owned. 

The government must retain a controlling stake in DB, according to the German constitution and therefore could sell off as much as 25% of the rail operator. The transport minister Mr Tiefensee is expected to provide a draft railway privatisation bill to parliament by spring 2007. He reportedly said that DB’s customers would benefit from its privatisation, as the quality of the company's services in relation to competitors would improve.

Deutsche Bahn AG chief executive Hartmut Mehdorn is optimistic that the company will be partly listed on the stock exchange by 2008, reported Frankfurter Allgemeine Zeitung, quoted by AFX News. Mehdorn called the government's decision partially to privatise the company a “good and important signal”, added the report.

German press also quoted Mr Mehdorn’s strategy to invest several billion of euros in the rail network and as part of plans to expand in several European countries: 2 billion euros in container traffic business, 2 billion euros in logistics and 1-3 billion euros to acquire state-owned railway operators in Eastern Europe.

The agreement on privatisation allowed DB management and rail unions to resume wage negotiations, according to the e-europnews agency. German rail unions TRANSNET and GDBA are quoted as saying they would no longer launch warning strikes before the end of the legislative process.

(Sources: Financial Times, AFX News Limited, e-europnews)

Angola reconstructs railways for US$4 billion

The Angolan transport minister André Luis Brandão, revealed huge governmental plans to revitalise the country’s rail network. Afrol News quoted Mr Brandao who announced the government has set aside US$4 billion over the next 11 years to build and reconstruct the major railways. The national “Angoferro” project will link Angola to its eastern neighbours – Democratic Republic of Congo and Zambia, and further to the rail networks in Southern Africa.

Less than a third (only 850 km) of Angola’s old rail network had survived the decades of civil war. After the rehabilitation of 480 km of railway, the train link between Lunada and Malange provinces will resume operations in 2007.

Rail India Technical and Economic Services (Rites) has recently delivered 22 coaches to the railways of Angola, while General Electric International expressed its interest in supplying locomotives.

(Source: Afrol News)


Bombardier expands into Spain, France, Switzerland and China markets

Bombardier won an US$530 million order for supplying 100 electric freight locomotives for Renfe (Spanish National Railways), in a contract that will also cover 14 years of maintenance.

The French National Railways SNCF had selected Bombardier to supply up to 372 commuter trains for the Ile-de-France region centred on Paris in an US$3.4 billion contract, that was later challenged in court by Althom, the maker of French high speed TGV trains. In a statement issued on 2 November 2006 from its global headquarters in Berlin, Bombardier Transportation pointed out that “this contract was awarded as a result of a European-wide tender issued in 2004.”

In consortium with Alstom Transport, Bombardier will supply 13 multiple-unit trains to BLS AG, the second-largest passenger railway operator in Switzerland, for US$74 million (of which Bombardier's share is US$49 million).

Together with its joint venture partners in China, Bombardier will deliver 51 Metro trains, to the Shanghai Shensong Line Mass Transit Co – China’s largest metro system – under a US$326 million contract. Other members of the joint venture are Changchun Bombardier Railway Vehicles Co, Ltd and Bombardier-CP Propulsion Systems Co, Ltd.

(Sources: Bombardier, Inc.)


Investment plans for Egyptian railways

The Egyptian government authorised investment plans of US$860 million to develop railway infrastructure, plus another $600 million in loans later this year. In addition to upgrading existing tracks and other infrastructure, new lines are to be built from Mersa Allam to Aswan in southern Egypt, between El-Sadat City and Cairo in northern Egypt, and a connection to the Red Sea tourist resort Hurghada with the line from Safaga to Luxor, according to Railways Africa.

Egypt’s railways are running at a loss of some £E1.6 billion (US$280 million) annually. Out of a total fleet of 701 locomotives, only 400 are in working order. Two rush-hour trains packed with commuters collided on 21 August 2006 in the town of Qalyoub, 12 miles north of Cairo, killing 57 people and injuring nearly 150.

Egypt has immediate plans to improve its railway connections towards the Libyan border, according to Afrol News. Regional plans will reportedly connect the entire North African region by a railway passing through all of Libya, connecting Egypt's railways with those of Tunisia, Algeria and Morocco.

(Sources: Afrol News , Railways Africa)

EU funds for Romanian railways

The European Union has pledged around 3.5 billion euros for modernising the railways in Romania and bring them up to the EU standards. After the country will be joining the EU in January 2007, more than half of this investment will support the upgrading of rail infrastructure and acquisition of new rolling stock. The Romanian government is expected to contribute with 1 billion euros in order to benefit from the EU funds, according to International Transport Journal.

(Source: International Transport Journal)


Kenya Railways to cut thousands of jobs

The Nation newspaper in Nairobi revealed the plans of Rift Valley Railways to cut 5,350 jobs from former Kenya Railways, after selecting 3,166 employees only to keep out of the current 8,860 workers. The lay-offs were later endorsed by the board of Kenya Railways and will be financed from the US$70 million credit approved in April 2006 by the World Bank.

At the beginning of November 2006, the Rift Valley Railways consortium led by South Africa’s Shelthan Trade Corp took over the concessioning of Kenya Railways Corporation (KRC) and Uganda Railways Corporation (URC) as part of the East Africa Community initiative to provide reliable railway operations between the two countries, the East African Standard reports.

The three-year process has sparked further controversy after a number of workers  discovered their salaries slashed by as much as 25 percent in the new contracts they had signed with the concessionaire. The newspaper quoted the Railways Workers Union secretary general, Mr John Chumo as saying "I would be very surprised at this particular development because the concessionaire promised to take the workers on board on better terms."

(Sources: The East African Standard; The Nation)


Bangladesh Railways to be upgraded

The Asian Development Bank (ADB) confirmed on 15 October 2006 that it would provide US$430m over five years to fund capacity expansion and upgrading of infrastructure and rolling for Bangladesh Railways, according to the Railway Gazette International.

The main loan will be paid in five tranches, starting with US$100m in 2007 and will include a reform component, funded by a $30 million loan, focusing on transforming the government-owned Bangladesh Railway into a more commercially oriented organisation.

The government will provide US$107m from its own resources for the Railway Sector Investment Programme that has been developed with help from ADB, Japan Bank for International Cooperation (JBIC) and the World Bank in order to invest US$925m in the national network over the next seven years.

(Source: Railway Gazette International)


Train accident in South Africa

Nineteen people were killed and another twelve were injured near Cape Town on 13 November 2006 when a train smashed into a truck carrying 30 farm workers in one of South Africa's deadliest rail accidents for decades. Neither train driver and guards, nor rail commuters were injured, although many suffered from shock.
 
The accident happened at a level crossing, which had no barriers. Last year, transport minister Jeff Radebe said the number of level crossing accidents in South Africa was unacceptable.

According to All Africa Global Media, the Railway Safety Regulator said preliminary investigations suggest that the immediate cause of the accident was that "the [truck] driver ignored warning signals and proceeded to cross the level crossing resulting in the collision with the train." The South African Rail Commuter Corporation-Metrorail set up a board of enquiry into the accident.

(Source: All Africa Global Media)



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