The authorities of each European country are very much aware of the fact that railway liberalization increases the transport activity, as well as competitiveness, quality, varies services and encourages private investors. This is also something imposed by European policies. But when we talk about non-European countries, opening markets is something which makes the authorities sceptical mainly due to the rooted monopole policy of the state over the strategic and vital sectors of the economy.
Although Turkey is only EU candidate country, the latest railway event, which proves that European policies have begun their step-by-step implementation, is the draft law presented to the Parliament by the Ministry of Transport, Binali Yıldırım. Thus, the project “Rail System Liberalisation and Rail Law” aims at separating the national railway company TCDD and at granting transport licenses to private companies. The adoption of the project would end the state monopole on the railway transport of freight and passengers.
We could say that the transformation and modernisation of Turkey’s railway system in the last ten years is due, to a certain extent, to Turkey’s EU accession process, even if the government representatives would not open up about it.
Although Minister of Foreign Affairs Ahmet Davutoglu said that because of misunderstandings between the two parties, Turkey and EU could go on separate ways, the current EU accession process has a significant impact on the reconstruction of Turkey’s social, political and economic sector. An example about the way in which European policies become more and more important in Turkey’s progress is the construction of high-speed lines and in the future, the railway infrastructure development strategy, also based on the development of the high-speed network and the modernization of existing railways, as well as on the acquisition of new rolling stock. Projects concerning the development of a modern railway system are obvious of European influence since Turkey has been neglected its railway system in the past 50 years to the benefit of road transport. In 2003-2008, the action plan set by authorities for the railway system has led to the modernization of TCDD and to the harmonization of the Turkish legislation on rail transport to European standards. In this period, the EU has facilitated the accession to loans for different railway projects (for example, EUR 120 Million has been allocated for the construction of Ankara-Istanbul high-speed line through the Pre-Accession Instrument and EIB funds have amounted to EUR 850 Million). Moreover, the state’s interest in the railway sector has reflected in the investments allocated over the past 10 years when railway projects have received more than USD 14 Billion.
The main objectives in the implementation of railway transport reforms in Europe have consisted in the optimisation of competitiveness, the set-up of international integrated and quality railway services, the efficient use of the infrastructure capacity and the end of the market share decline. These are several objectives also considered by Turkish authorities that could be met through the liberalisation programme recently launched by the Ministry of Transport.
In this context, in March, the government sent the Parliament the draft law on the separation of the national railway company in two companies, the infrastructure manager and the railway operator. According to the document, TCDD will maintain the railway network management attributions and a new company, Turktren, will take over the passenger and freight transport services. The draft law, which could become effective by the end of 2014, will allow the accession of private operators to the railway transport market and they could receive operation licenses of up to 49 years.
“The routes will remain to the state, but those who will want to use them will be able to do so, just like in road and air transport. As regards the new draft law, the access right will be given to companies on a maximum period of 49 years”, declared Minister of Transport Binali Yıldırım.
According to the project, public and private entities will be able to receive license for the construction of their own railway infrastructures for which they could become operators of the infrastructure facilities and transport services in the network.
The authorities have already set up a railway regulatory body operational since 2012. The Government wants that the freight transport services provided by Turktren will become profitable in five years and that the railway freight transport share will reach 20% from the current 5% until 2023.
Participation of the private sector stimulated by railway investments
“The liberalisation of the railway sector is a historical step regarding the implication of the private sector” and to stimulate the participation of the private sector in the railway area, “the investments allocated to the construction of the lines and rail stations which will remain state-owned, will amount to USD 50 Billion. If we don’t invest in infrastructure, railway companies could be sceptical as they would not have the courage to operate on an obsolete network. The allocation of investments will stimulate the participation of the private sector in the railway system”, declared Minister of Economy Zafer Çağlayan.
According to the press, quoting the draft law, lines Ankara-Eskişehir, Ankara-Konya and probably the latest line put in service (Eskişehir-Konya) will be opened to the private companies who will submit their offers.
As regards the liberalisation of the railway sector, Cavit Uğur, the General Manager of UTIKAD (Association of International Forwarding and Logistics Service Providers) said in an interview from January that “the liberalization of the railway transport will increase competitiveness and this is the purpose of several operators. Also, companies will be capable to transport people and freight using their own trains and staff and the time, service quality and cost of transport will be controlled by operators. Following the liberalization, it is expected that the private sector will invest in different segments of the railway sector allowing Turkey to make rapid progresses in the railway sector”.
The Government remains sceptical about privatisation programmes and Prime Minister Recep Tayyip Erdogan declared in February that “if I allowed the concession of Istanbul’s network of highways and bridges for USD 5.6 Billion (the second highest amount in the history of Turkey’s privatization plan), I would betray my country”. Moreover, he said that in the next period he would review the sale process of Istanbul gas supplier Başkentgaz. These statements came in a sensitive moment when Turkey wants to tender the construction and operation of an airport in Istanbul, apart from other important projects. Nevertheless, a month after the declaration of the Prime Minister, privatization programmes are one the right track. In March, Turkey sold several energy distribution centres for USD 3.5 Billion. Concerning the liberalisation of the railway sector and the concession of lines, the prime minister has made no declaration so far that would announce the government’s position on the opening of the railway sector to private companies.
At present, TCDD’s network amounts to 10,984 km and the railway infrastructure development strategy until 2023 stipulates the extension of the network to 25,940 km through the construction of 10,000 km of high-speed lines and of 4,000 km of conventional lines.
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