The World Bank has approved a EUR 51.3 million loan for Republika Srpska (RS) Railways restructuring project to improve the operational efficiency and financial sustainability of the RS Railways through financial, workforce and organizational restructuring.
The overall railway restructuring plan would be implemented over the period 2018-2021 with bank loan proceeds supporting all three areas of restructuring.
“We expect that once this process is completed the RS Railways will become financially sustainable and will provide better services. This is needed in order to improve the competitiveness of the railways vis-à-vis road transport, which will result in large economic and environmental benefits and will enable companies to transport goods in a cost-effective way,” said Antonio Nunez, World Bank Senior Transport Specialist and Task Team Leader of the project.
Currently, the RS Railways transports daily fewer than 500 paying passengers for a total cost of about BAM 20 million (EUR 10.2 million) a year. Each passenger return trip costs almost EUR 87. The vast majority of this cost is borne by the whole community in the RS, through direct public subsidy, cross subsidy from freight services and by consequent underinvestment in infrastructure and maintenance. The RS Railways offers good freight transport services and carries more tonnage per kilometer of track than most of the railways in the Western Balkans, even close to the EU average, and is in good financial health. In order to overcome the fierce competition from road haulage, the RS Railways needs to keep freight rates competitive and reconsider the cross subsidy to passenger services that also undermines business competitiveness.
This project is part of the second phase of the Bosnia and Herzegovina’s Transport Sector Modernization Program (TSMP) the goal of which is to improve transport connectivity of the country along priority transport links and to support improvements in transport operations and asset management practices.
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