“The situation of the Romanian railway system is proof of irresponsible management. I can’t understand how it has come to these losses, they are revolting, as is the performance of management at state-run railway companies. I cannot understand how come this has been tolerated so far,” says Daniel Daianu, economic analyst.
CFR SA, which manages the railway infrastructure, had total losses of EUR840 million between 2007 and 2010, while passenger transporter CFR Calatori lost EUR840 million during the same period, show Finance Ministry data. Although the railway infrastructure is in an advanced stage of degradation (a train takes 6 hours to cover the 330 km between Tulcea and Bucharest because of the speed restrictions), the state continues to allocate less money for railway infrastructure than for road infrastructure.
This year, out of the EUR3.4 billion budget of the Transport Ministry, EUR990 million will be allocated for the railway infrastructure, whereas EUR1.8 billion were allocated for the company in charge of roads. In France, Austria, Germany and the UK, railway funds reach 50-60% of the ministry’s budget. What’s worse is that the amount allocated by the Romanian government is spent inefficiently. Although last year the rehabilitation of the Bucharest-Constanta railway line was finalized, after over EUR900 million worth of investments, it takes the same amount of time to travel that distance as before the rehabilitation.
This resulted in a series of direct and negative consequences such as lower demand for train tickets and in the orders for the transport of goods by the state-run company. Demand has turned towards road transport and even towards private railway transport.
Private railway operators manage through an efficient management to make a profit using the same railway infrastructure.
Not only CFR Calatori, which has received over EUR2 billion in state subsidies in the past two years, but also CFR Marfa, is reporting huge losses every year. But the biggest hole is dug by CFR SA, which is also up to its neck in debt.
CFR SA, which is subordinated to the Transport Ministry, is in charge of managing and maintenance works for the public infrastructure, in 2010 had losses of EUR308 million, even higher than its EUR265 million turnover. The company’s overall debts amounted to 7.6 million lei (EUR1.7 million), according to information published by the Finance Ministry.
The Government is now considering converting into shares the RON3.99 billion debts of CFR SA corresponding to last year. The shares will be taken over by the Transport Ministry as sole shareholder. This measure is seen by economic analysts as a desperate one. The disastrous results are also the result of the appointment of managers on political criteria. The former general manager of the National Romanian Railway Company is being tried for causing EUR70 million in damages to the company.
“The losses that the state-run railway companies in Romania are making are immeasurable and impossible to comprehend. (…) The state needs to take the initiative, access EU money to put the entire Romanian railway system where it belongs,” said Mihai Mihaita, president of the General Association of Engineers in Romania.
CFR Calatori passenger arm posted losses of just over EUR20 million in 2010, after it had posted losses of EUR50 million a year before, according to Finance Ministry data.
CFR Marfa goods transporter in turn loses clients and market share (it has reached 5%) while private companies such as Grup Feroviar Roman, the largest player, and other private companies, are boosting their turnovers and profits. CFR Marfa ended 2010 with a turnover of EUR237.4 million, down by around 5% against 2009, while the company’s loss amounted to EUR127 million in 2010. In all, between 2008 and 2010 the losses of the goods transport railway company amounted to EUR254 million, according to Finance Ministry data.
“There is one railway company that should be profitable, goods transporter CFR Marfa. (…) Fees for goods transport services should have covered all costs and subsidies,” Daianu believes. The opinion is shared by Mihaita. (EUR1=RON4.3672)
(English version by Daniela Stoican)