Domestic railways lose funding

The first cracks of liberalization are appearing on the railway market, but the government has a lot of work ahead as the Transport Ministry considers restructuring and funding problems for a system that is as disorganized as it is extensive.

Transport Minister Vít Bárta, who vowed to introduce competition to the market when he assumed the post in July, spoke recently about ways to make state-owned Czech Railways (ČD) and the Railway Infrastructure Administration (SŽDC) more competitive. The ministry has also been addressing cash issues. Funding for 10 regional railways was canceled, and most recently the Czech Republic lost millions of euros in EU funding for a railway tunnel between Prague and Beroun.

The chaos is linked to decades of organizational issues and lack of consistency in prioritizing the upkeep of the railway system, according to Paul Riley, director of the Central European office of Jacobs Consultancy, which specializes in transport planning and European funding.

"[The Czech Republic is] very poor at setting priorities according to real needs, and we still don't have a proper national transport infrastructure development plan," which can discourage EU funding, he said. "[The country is] more likely to lose funding, especially in the cases of large projects where the EC approves them directly, if we are not planning our infrastructure properly."

The European Union decided to axe 360 million Kč intended to fund a tunnel between Prague and Beroun. The project was one of 15 infrastructure projects in member states the EU chose to limit or completely cut funding from the Trans-European Networks (TEN) initiative because of missed deadlines. Tomáš Dombrovský, a spokesman for the Transport Ministry, said in the case of the Czech Republic, the project could not be started soon enough to meet completion dates set by the EU.

"Where projects are no longer meeting their objectives, then EU funding must be cut and re-allocated so we make best use of the limited resources," EU Transport Commissioner Siim Kallas said in a statement about the cuts.

Dombrovský said there were no other projects currently at risk of losing EU funding.

Riley said funding pulled by the EC was always linked to a lack of interest in projects on the side of the Czech government.

"The European Commission is very keen on railways, and the Czech government has historically been against investing heavily in rail because, in practice, it plays a smallish role in the economy, a bit of a Catch-22," Riley said.

Transportation funding from the EU Social Cohesion fund is likely to shrink significantly following negotiations about the next grant period that starts Nov. 10. The fund provides grants for regional projects, including railways.

In other money woes, the Transport Ministry has decided to stop funding for 10 regional lines following requests from SŽDC, which owns the lines, Dombrovský said. According to SŽDC, there is not enough traffic on those routes to recoup upkeep costs.

"We only had one year to invest hundreds of millions of crowns to ensure their functionality," Pavel Halla, a spokesman for SŽDC told The Prague Post. "The resources will be saved so that we can use them on the maintenance of other tracks, which is a real and lasting interest."

The routes will either be completely shut down or will continue to operate under private companies that negotiate with SŽDC.

The choice to cancel the routes has troubled some regional operators, who questioned the effectiveness of suspending the routes.

"The list includes tracks that have not been used for ages and where trees grow, but it also includes tracks that are being used on a regular basis," said Jan Šatava, the chairman of the board for privately owned JHMD Railways, which operates on one of the canceled tracks. He added the key to saving money wasn't cutting tracks, but making subsidies more transparent. "I say first make the financing transparent, then cut the tracks."

The ministry and SŽDC said any route whose service is canceled will not affect transportation in those areas, as other modes of transport will be able to handle the traffic.

Bárta is working to put into action his vow to open the rail market to private companies with proposals to consolidate ČD and SŽDC operations, which he said will save money and improve infrastructure and transparency.

In a Nov. 8 meeting, a working group within the Transport Ministry began discussing proposals for a long-term plan to merge the two companies into one holding company, which Bárta said will improve the transparency of the flow of subsides. The minister has said a merger would likely result in SŽDC being divided into two parts: The part that owns and builds tracks would merge with the Road and Motorway Directorate, and the part that deals with track operation would merge with ČD.

In the short-term, the working group is also discussing the transfer of around 10,000 employees from ČD to SŽDC.

"It is the logical completion of the transformation process of Czech Railways," Halla said. "We definitely look forward to this, because until now, ČD operated on the railways by contract, and the possibility of thorough inspections of the costs of railway operation was missing."

Bárta has also said he thinks ČD needs to expand operations abroad in order to remain profitable.

Dombrovský said he could not comment on those statements, because it is against EU legislation for the ministry to be involved in or comment on the trade policies of ČD.

- Filip Šenk and Klára Jiřičná contributed to this report.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com