Measures to streamline rail transportation
The Romanian government continues to seek better measures to improve the performance of the national railroad company
Valentin Țigău, 05.06.2014, 13:39
In Wednesday’s session, the government passed a memorandum on measures to turn Romania’s state-owned railroad company CFR more efficient, all part of a General Transportation Master Plan for Romania. According to a press release from the Government, the proposals in the document include shrinking the railroad network, stimulating competitiveness by outsourcing public service contracts, introducing performance indicators in financing public railroad transportation services and cost reduction programs. Prime Minister Victor Ponta said last week that the loss-incurring rail lines should be closed down, specifying that there is an older strategy that could be used, agreed upon with the IMF:
“This is an older strategy that provides for keeping passenger lines that are profitable, for opening up the market to private operators, and if there are lines that are not used, they obviously need to be closed down, because they produce losses. Investing in the development of infrastructure does not mean holding on to rail lines that no one uses, it means modernizing the ones that are not used.”
This statement was made in the context in which there is an IMF delegation in Bucharest for the third evaluation of the stand-by agreement signed with Romania. The IMF evaluation depends on a number of important economic decisions, with significant social impact. Prior to the 1989 anti-communist revolution, Romania had one of the biggest and most utilized railway networks in Europe. The shift to a market economy, along with an unprecedented growth in road and air transport, has resulted in a decline of railroads.
The network shrank from 15,000 km in 1989 to 13,800 km at present. It is significant that in its first day of evaluation for the stand-by agreement in Bucharest, the IMF delegation met Romanian Minister of Transport, Dan Sova. The topic of discussion was state companies run by the ministry, with an emphasis on railroads, which are incurring major losses and where the efforts to privatize have proven a failure so far, as was the case with the freight division of the national railroad company.
Another topic on the agenda of talks was the situation of the 2,500 employees of the freight division that may be downsized this year in line with the agreement between Romania’s government and the IMF.
