Download - RAILWAY RESTRUCTURING EXPERIENCES
The World Bank
RAILWAY RESTRUCTURING
EXPERIENCES
Ankara, Turkey
October, 2001
The World Bank
A Perspective The World Bank and Turkish Railways
(TCDD): two loans, over $240 million last loan more than 13 years ago
TCDD’s problems: market and financial pressures
Coming challenge: EU requirements What other countries are doing A few comparisons Ideas for Turkey
The World Bank
Km of Line (1999, 2000 for TCDD)
534542902324
31423
37477
22991909
22891
2813
11364
3662
99788671
0
5000
10000
15000
20000
25000
30000
35000
40000
Austria
Bulgaria
Denmark
France
Germany
Greece
Ireland
Poland
Portugal
Romania
Slovakia
Sweden
Turkey
The World Bank
Passenger-kms (000,000)
(1999, 2000 for TCDD)
789938195113
66495
72543
15831421
26187
4329
12304
296874346146
0
10000
20000
30000
40000
50000
60000
70000
80000
The World Bank
Passenger TrafficIndex: 1980=100
40
60
80
100
120
140
160
1980 1985 1990 1995 2000
France
Romania
Turkey
Poland
The World Bank
Freight Tonne-Km (000,000) (1999, 2000 TCDD)
52971938
71494
326466
55460
2179
15927
986214400
8237
14733
53438
0
10000
20000
30000
40000
50000
60000
70000
80000
The World Bank
Freight TrafficIndex: 1980=100
20
40
60
80
100
120
140
160
180
200
1980 1985 1990 1995 2000
France
Romania
Turkey
Poland
The World Bank
Traffic Mix:Passenger-Km as % of P-km + T-
Km(1999, 2000 TCDD)
34.9
41.9
72.5
55.450.4
82.9
75.3
32.1
66.5
43.6
23.1
34
42.7
0
10
20
30
40
50
60
70
80
90
The World Bank
Ratio of Average Passenger Fares
to Average Freight Tariffs(1999)
1.04
0.35
1
1.36
2.77
0.4
3.17
0.610.86
0.360.33
4.13
1
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
The World Bank
Employee Productivity:(P-Km+T-Km)/Employee (000)
(1999, 2000 TCDD)
437
196
672688739
182170
400
521
268262
1220
337
0
200
400
600
800
1000
1200
The World Bank
Traffic Density:(P-Km+T-Km)/Km (000)
(1999, 2000 TCDD)
2125
3034
38173843
830988
3567
23142484
3504
2188
1659
4234
0
500
1000
1500
2000
2500
3000
3500
4000
4500
The World Bank
What Others Are Doing
The railway as enterprise, government as policy maker/regulator
Choices in structure: Turkey will look at the EU models
Moving the public/private boundary -- concessioning and privatization are major elements in restructuring programs in some countries
All railways are changing: mixes emerging
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Directions of Railway Change
Private Involvement
Str
uct
ura
l Ch
ange
Mixtures are possible!
Public Ownership
Partnerships: Concessions or Franchises Awarded Private Ownership
Integral
China, Russia and India (ministries), MAV, SRT, MZ, others, (SOE's), TCDD
Argentina (13), Brazil (9), Mexico (5), Peru (3), Guatemala, Bolivia (2), Panama, Cote d'Ivoire/Burkina Faso, Cameroon, Congo (Brazzaville), Malawi, Madagascar, Jordan
New Zealand, Ferronor (Chile), CVRD (Brazil), A&B (Chile)
Dominant Integral, Separated Minority Operators
Amtrak, VIA, Japan Freight
Mexico City suburban, CONCOR (India)
US Class I, CN and CP, East/West/Central Japan Railways
SeparationE.U. and Chile passenger
Swedish suburban, FEPASA (Chile), LHS line (Poland)
U.K. franchises and EWS, Polish and Romanian freight
Range of the EU model
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EU ORDER 91-440(Updated as Order 2001/12,13,14)
Freight Intercity Passenger Regional Passengers Suburban Passengers
Infrastructure Ownership
Infrastructure Improvement Kept at national level, Can be devolved
Infrastructure maintenance may be privatized
Control of Operations
(Dispatching and Scheduling)
Train Movement
Equipment Can be Can be Can be devolved
Marketing Privatized Privatized
Financial AccountabilityPSO Support Permitted
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The Deutsche Bahn Structure
DB AG Holding Company
DB Netz(Infrastructure)
DB Stations and Service AG
DB Cargo DB Reise & Touristik AG(Intercity Passenger)
DB Regio AG(Local Passengers)
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Romania: The New Railway SystemWith Focus on Transition
Minister of Transport
Ensures uniform data
Rail ManagementServices Company
PassengerCompany
InfrastructureCompany, publicenterprise
Real EstateSubsidiary
FreightCompany
Rail AssetCompany
Old SNCFR
Graduallydissolve
First to be soldSplit commuter from ICP,transfer commuter, eventuallyconcession ICP
Sell or develop
Spin off
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Railway Concessioning
Began in Argentina in 1991 Now 13 countries with concessions -- freight (32), inter city
passenger (2), suburban passenger (8) and Metros (4) A concession is NOT a sale of assets: it is, instead, a transfer
of control for a period (+/- 30 yrs) Concessions can be either payment to government for use of
assets or payment by government for subsidy and capital program
Experience to date has been highly positive As of now, the only privatization and concessioning in Europe
is the UK and Estonia. Not required by EU rules
The World Bank
TCDD’s Problems
Confusion of government and enterprise roles Organization for production, not market
no Lines of Business, no costing informationLack of commercial, financial goals
Imposed social roles (low passenger fares) Non-core distractions (ports)
The World Bank
TCDD’s Program: Initial Actions
TCDD as enterprise separated from government -- enterprise under commercial rules (profit motive, business Board with outside involvement and private sector personnel rules)
Operating functions (Infrastructure, Freight, Passenger) adopt LOB organization on an accounting basis
Separate and localize suburban operations -- accounting first, then institutional
Spin off social, non-rail activities Separate Ports operations
The World Bank
Structural Options Structure -- infrastructure and line of business
separation Why separation of infrastructure?
clarity of costs and benefits of various services facilitate mixed solutions EU rules
Why NOT separate complex and costly -- transaction costs potential conflicts and confusion
Critical issues access charges -- structure and levels? scheduling and dispatching -- who and where?
Lines of business Ports separated freight, local passenger,intercity passenger
The World Bank
Options for Private Sector Role
Private sector, per se, is neither panacea nor ideological objective
Don’t privatize monopolies -- restructure them first, along with railway services, and provide for regulation
Consider specialized companies (like CONCOR in India) for private sector involvement
Consider privatization or concessioning of passenger or freight
The World Bank
What Has the World Bank Done?
Restructuring analyses, analytical tools and TA Support for required new accounting systems Asset rehabilitation to support new structures Labor transitions and retraining (Argentina, Brazil,
Poland – potentially Russia) Environmental cleanup Changes in structure (suburban devolution,
creation of management and accounting systems) Support for required new accounting systems Risk guarantees Transaction management Investment in private operators